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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 62.75. The lowest was -5.25. And the median was -2.61.
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 * 1.1495||+||0.528 * 1.0016||+||0.404 * 1.0508||+||0.892 * 0.9791||+||0.115 * 1.0445|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0155||+||4.679 * -0.0256||-||0.327 * 1.0123|
|This Year (Mar16) TTM:||Last Year (Mar15) TTM:|
|Accounts Receivable was $1,162 Mil.|
Revenue was 1297.7 + 1380 + 1399.2 + 1383.6 = $5,461 Mil.
Gross Profit was 518.3 + 569 + 582 + 584.2 = $2,254 Mil.
Total Current Assets was $4,486 Mil.
Total Assets was $9,418 Mil.
Property, Plant and Equipment(Net PPE) was $226 Mil.
Depreciation, Depletion and Amortization(DDA) was $272 Mil.
Selling, General & Admin. Expense(SGA) was $1,158 Mil.
Total Current Liabilities was $4,404 Mil.
Long-Term Debt was $3,226 Mil.
Net Income was 185.7 + 212.3 + 232.3 + 189.3 = $820 Mil.
Non Operating Income was -1.5 + -6.6 + 0.1 + -3.3 = $-11 Mil.
Cash Flow from Operations was 212.7 + 266.9 + 338.5 + 253.9 = $1,072 Mil.
|Accounts Receivable was $1,032 Mil.
Revenue was 1320.9 + 1409.9 + 1440.9 + 1405.6 = $5,577 Mil.
Gross Profit was 549.1 + 578 + 600.4 + 577.8 = $2,305 Mil.
Total Current Assets was $5,227 Mil.
Total Assets was $10,353 Mil.
Property, Plant and Equipment(Net PPE) was $203 Mil.
Depreciation, Depletion and Amortization(DDA) was $269 Mil.
Selling, General & Admin. Expense(SGA) was $1,165 Mil.
Total Current Liabilities was $4,556 Mil.
Long-Term Debt was $3,729 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)|
|=||(1161.7 / 5460.5)||/||(1032.2 / 5577.3)|
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)|
|=||(569 / 5577.3)||/||(518.3 / 5460.5)|
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 - (4486.1 + 226.3) / 9418.3)||/||(1 - (5227.4 + 202.6) / 10353)|
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))|
|=||(268.6 / (268.6 + 202.6))||/||(271.9 / (271.9 + 226.3))|
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)|
|=||(1157.8 / 5460.5)||/||(1164.5 / 5577.3)|
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)|
|=||((3225.7 + 4404) / 9418.3)||/||((3728.6 + 4556) / 10353)|
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|
|=||(819.6 - -11.3||-||1072)||/||9418.3|
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