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The zones of discrimination for M-Score is as such:
An M-Score of less than -2.22 suggests that the company is not an accounting manipulator.
An M-Score of greater than -2.22 signals that the company is likely an accounting manipulator.
During the past 13 years, the highest Beneish M-Score of The Western Union Co was 62.73. The lowest was -5.25. And the median was -2.60.
The M-score was created by Professor Messod Beneish. Instead of measuring the bankruptcy risk (Z-Score) or business trend (F-Score), M-score can be used to detect the risk of earnings manipulation. This is the original research paper on M-score.
The M-Score Variables:
The M-score of The Western Union Co for today is based on a combination of the following eight different indices:
|M||=||-4.84||+||0.92 * DSRI||+||0.528 * GMI||+||0.404 * AQI||+||0.892 * SGI||+||0.115 * DEPI|
|=||-4.84||+||0.92 * 1.1188||+||0.528 * 1.0206||+||0.404 * 1.0513||+||0.892 * 0.9815||+||0.115 * 1.0237|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9504||+||4.679 * -0.0266||-||0.327 * 0.9793|
|This Year (Jun16) TTM:||Last Year (Jun15) TTM:|
|Accounts Receivable was $1,164 Mil.|
Revenue was 1375.7 + 1297.7 + 1380 + 1399.2 = $5,453 Mil.
Gross Profit was 553.8 + 518.3 + 569 + 582 = $2,223 Mil.
Total Current Assets was $4,520 Mil.
Total Assets was $9,395 Mil.
Property, Plant and Equipment(Net PPE) was $222 Mil.
Depreciation, Depletion and Amortization(DDA) was $275 Mil.
Selling, General & Admin. Expense(SGA) was $1,118 Mil.
Total Current Liabilities was $4,351 Mil.
Long-Term Debt was $3,229 Mil.
Net Income was 205.6 + 185.7 + 212.3 + 232.3 = $836 Mil.
Non Operating Income was 2.5 + -1.5 + -6.6 + 0.1 = $-6 Mil.
Cash Flow from Operations was 272.9 + 212.7 + 266.9 + 338.5 = $1,091 Mil.
|Accounts Receivable was $1,060 Mil.
Revenue was 1383.6 + 1320.9 + 1409.9 + 1440.9 = $5,555 Mil.
Gross Profit was 584.2 + 549.1 + 578 + 600.4 = $2,312 Mil.
Total Current Assets was $5,121 Mil.
Total Assets was $10,064 Mil.
Property, Plant and Equipment(Net PPE) was $201 Mil.
Depreciation, Depletion and Amortization(DDA) was $263 Mil.
Selling, General & Admin. Expense(SGA) was $1,198 Mil.
Total Current Liabilities was $4,565 Mil.
Long-Term Debt was $3,726 Mil.
1. DSRI = Days Sales in Receivables Index
A large increase in DSR could be indicative of revenue inflation.
|DSRI||=||(Receivables_t / Revenue_t)||/||(Receivables_t-1 / Revenue_t-1)|
|=||(1163.5 / 5452.6)||/||(1059.5 / 5555.3)|
2. GMI = Gross Margin Index
Measured as the ratio of gross margin in year t-1 to gross margin in year t.
Gross margin has deteriorated when this index is above 1. A firm with poorer prospects is more likely to manipulate earnings.
|=||(GrossProfit_t-1 / Revenue_t-1)||/||(GrossProfit_t / Revenue_t)|
|=||(2311.7 / 5555.3)||/||(2223.1 / 5452.6)|
3. AQI = Asset Quality Index
AQI is the ratio of asset quality in year t to year t-1.
|AQI||=||(1 - (CurrentAssets_t + PPE_t) / TotalAssets_t)||/||(1 - (CurrentAssets_t-1 + PPE_t-1) / TotalAssets_t-1)|
|=||(1 - (4519.7 + 221.7) / 9394.9)||/||(1 - (5120.9 + 201.2) / 10063.8)|
4. SGI = Sales Growth Index
Ratio of sales in year t to sales in year t-1.
Sales growth is not itself a measure of manipulation. However, growth companies are likely to find themselves under pressure to manipulate in order to keep up appearances.
5. DEPI = Depreciation Index
Measured as the ratio of the rate of depreciation in year t-1 to the corresponding rate in year t.
DEPI greater than 1 indicates that assets are being depreciated at a slower rate. This suggests that the firm might be revising useful asset life assumptions upwards, or adopting a new method that is income friendly.
|DEPI||=||(Depreciation_t-1 / (Depreciaton_t-1 + PPE_t-1))||/||(Depreciation_t / (Depreciaton_t + PPE_t))|
|=||(263.1 / (263.1 + 201.2))||/||(274.9 / (274.9 + 221.7))|
6. SGAI = Sales, General and Administrative expenses Index
The ratio of SGA expenses in year t relative to year t-1.
SGA expenses index > 1 means that the company is becoming less efficient in generate sales.
|SGAI||=||(SGA_t / Sales_t)||/||(SGA_t-1 /Sales_t-1)|
|=||(1117.9 / 5452.6)||/||(1198.4 / 5555.3)|
7. LVGI = Leverage Index
The ratio of total debt to total assets in year t relative to yeat t-1.
An LVGI > 1 indicates an increase$sgai= in leverage
|LVGI||=||((LTD_t + CurrentLiabilities_t) / TotalAssets_t)||/||((LTD_t-1 + CurrentLiabilities_t-1) / TotalAssets_t-1)|
|=||((3228.5 + 4350.8) / 9394.9)||/||((3725.8 + 4565.1) / 10063.8)|
8. TATA = Total Accruals to Total Assets
Total accruals calculated as the change in working capital accounts other than cash less depreciation.
|=||(NetIncome_t - NonOperatingIncome_t||-||CashFlowsfromOperations_t)||/||TotalAssets_t|
|=||(835.9 - -5.5||-||1091)||/||9394.9|
An M-Score of less than -2.22 suggests that the company will not be a manipulator. An M-Score of greater than -2.22 signals that the company is likely to be a manipulator.
The Western Union Co has a M-score of -2.46 suggests that the company will not be a manipulator.
Altman Z-Score, Piotroski F-Score, Accounts Receivable, Revenue, Gross Profit, Total Current Assets, Total Assets, Property, Plant and Equipment, Depreciation, Depletion and Amortization, Selling, General & Admin. Expense, Total Current Liabilities, Long-Term Debt, Net Income, Non Operating Income, Cash Flow from Operations
The Western Union Co Annual Data
The Western Union Co Quarterly Data