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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 55.61. The lowest was -3.60. And the median was -2.62.
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 * 1.2539||+||0.528 * 1.0493||+||0.404 * 0.9987||+||0.892 * 0.9889||+||0.115 * 0.9892|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.4366||+||4.679 * -0.0845||-||0.327 * 1.0782|
* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.
|This Year (Dec16) TTM:||Last Year (Dec15) TTM:|
|Accounts Receivable was $1,327 Mil.|
Revenue was 1371.7 + 1377.8 + 1375.7 + 1297.7 = $5,423 Mil.
Gross Profit was 525.9 + 554.9 + 553.8 + 518.3 = $2,153 Mil.
Total Current Assets was $4,627 Mil.
Total Assets was $9,420 Mil.
Property, Plant and Equipment(Net PPE) was $221 Mil.
Depreciation, Depletion and Amortization(DDA) was $263 Mil.
Selling, General & Admin. Expense(SGA) was $1,669 Mil.
Total Current Liabilities was $5,379 Mil.
Long-Term Debt was $2,286 Mil.
Net Income was -355 + 216.9 + 205.6 + 185.7 = $253 Mil.
Non Operating Income was 4 + 2 + 2.5 + -1.5 = $7 Mil.
Cash Flow from Operations was 220 + 336.3 + 272.9 + 212.7 = $1,042 Mil.
|Accounts Receivable was $1,070 Mil.
Revenue was 1380 + 1399.2 + 1383.6 + 1320.9 = $5,484 Mil.
Gross Profit was 569 + 582 + 584.2 + 549.1 = $2,284 Mil.
Total Current Assets was $4,625 Mil.
Total Assets was $9,449 Mil.
Property, Plant and Equipment(Net PPE) was $232 Mil.
Depreciation, Depletion and Amortization(DDA) was $270 Mil.
Selling, General & Admin. Expense(SGA) was $1,175 Mil.
Total Current Liabilities was $5,415 Mil.
Long-Term Debt was $1,716 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)|
|=||(1327.3 / 5422.9)||/||(1070.4 / 5483.7)|
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)|
|=||(2284.3 / 5483.7)||/||(2152.9 / 5422.9)|
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 - (4626.6 + 220.5) / 9419.6)||/||(1 - (4624.6 + 231.8) / 9449.2)|
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))|
|=||(270.2 / (270.2 + 231.8))||/||(263.2 / (263.2 + 220.5))|
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)|
|=||(1669.2 / 5422.9)||/||(1174.9 / 5483.7)|
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)|
|=||((2286.1 + 5378.7) / 9419.6)||/||((1715.9 + 5415.3) / 9449.2)|
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|
|=||(253.2 - 7||-||1041.9)||/||9419.6|
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 -2.73 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