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Wayfair Beneish M-Score

: -3.94 (As of Today)
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The zones of discrimination for M-Score is as such:

An M-Score of equal or less than -1.78 suggests that the company is unlikely to be a manipulator.
An M-Score of greater than -1.78 signals that the company is likely to be a manipulator.

Good Sign:

Beneish M-Score -3.94 no higher than -1.78, which implies that the company is unlikely to be a manipulator.

NYSE:W' s Beneish M-Score Range Over the Past 10 Years
Min: -3.94   Med: -3.38   Max: -0.2
Current: -3.94

-3.94
-0.2

During the past 9 years, the highest Beneish M-Score of Wayfair was -0.20. The lowest was -3.94. And the median was -3.38.


Wayfair Beneish M-Score Historical Data

* All numbers are in millions except for per share data and ratio. All numbers are indicated in the company's associated stock exchange currency.

* Premium members only.

Wayfair Annual Data
Dec12 Dec13 Dec14 Dec15 Dec16 Dec17 Dec18 Dec19 Dec20
Beneish M-Score Premium Member Only Premium Member Only Premium Member Only Premium Member Only -3.68 -3.08 -3.85 -1.69 -3.94

Wayfair Quarterly Data
Mar16 Jun16 Sep16 Dec16 Mar17 Jun17 Sep17 Dec17 Mar18 Jun18 Sep18 Dec18 Mar19 Jun19 Sep19 Dec19 Mar20 Jun20 Sep20 Dec20
Beneish M-Score Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only -1.69 -2.78 -3.50 -3.69 -3.94

Competitive Comparison
* Competitive companies are chosen from companies within the same industry, with headquarter located in same country, with closest market capitalization; x-axis shows the market cap, and y-axis shows the term value; the bigger the dot, the larger the market cap.


Wayfair Beneish M-Score Distribution

* The bar in red indicates where Wayfair's Beneish M-Score falls into.



Wayfair Beneish M-Score Calculation

The M-score was created by Professor Messod Beneish. Instead of measuring the bankruptcy risk (Altman Z-Score) or business trend (Piotroski 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 Wayfair 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 * 0.7137+0.528 * 0.8093+0.404 * 0.1081+0.892 * 1.5498+0.115 * 0.7579
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.7867+4.679 * -0.2676-0.327 * 0.9459
=-3.94

* All numbers are in millions except for per share data and ratio. All numbers are indicated in the company's associated stock exchange currency.

This Year (Dec20) TTM:Last Year (Dec19) TTM:
Accounts Receivable was $110 Mil.
Revenue was 3670.851 + 3839.57 + 4304.672 + 2330.063 = $14,145 Mil.
Gross Profit was 1064.59 + 1147.428 + 1321.03 + 579.123 = $4,112 Mil.
Total Current Assets was $3,046 Mil.
Total Assets was $4,570 Mil.
Property, Plant and Equipment(Net PPE) was $1,493 Mil.
Depreciation, Depletion and Amortization(DDA) was $286 Mil.
Selling, General, & Admin. Expense(SGA) was $3,752 Mil.
Total Current Liabilities was $2,166 Mil.
Long-Term Debt & Capital Lease Obligation was $3,529 Mil.
Net Income was 23.818 + 173.166 + 273.877 + -285.865 = $185 Mil.
Non Operating Income was 2.087 + -13.584 + 3.11 + -0.246 = $-9 Mil.
Cash Flow from Operations was 206.743 + 331.027 + 1135.251 + -256.29 = $1,417 Mil.
Accounts Receivable was $100 Mil.
Revenue was 2533.49 + 2305.487 + 2343.251 + 1944.829 = $9,127 Mil.
Gross Profit was 577.355 + 539.921 + 559.6 + 470.456 = $2,147 Mil.
Total Current Assets was $1,377 Mil.
Total Assets was $2,953 Mil.
Property, Plant and Equipment(Net PPE) was $1,388 Mil.
Depreciation, Depletion and Amortization(DDA) was $192 Mil.
Selling, General, & Admin. Expense(SGA) was $3,077 Mil.
Total Current Liabilities was $1,612 Mil.
Long-Term Debt & Capital Lease Obligation was $2,279 Mil.




1. DSRI = Days Sales in Receivables Index

Measured as the ratio of Revenue in Accounts Receivable in year t to year t-1.

A large increase in DSR could be indicative of revenue inflation.

DSRI=(Receivables_t / Revenue_t) / (Receivables_t-1 / Revenue_t-1)
=(110.299 / 14145.156) / (99.72 / 9127.057)
=0.00779765 / 0.01092576
=0.7137

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.

GMI=GrossMargin_t-1 / GrossMargin_t
=(GrossProfit_t-1 / Revenue_t-1) / (GrossProfit_t / Revenue_t)
=(2147.332 / 9127.057) / (4112.171 / 14145.156)
=0.23527102 / 0.29071231
=0.8093

3. AQI = Asset Quality Index

AQI is the ratio of asset quality in year t to year t-1.

Asset quality is measured as the ratio of non-current assets other than Property, Plant and Equipment to Total Assets.

AQI=(1 - (CurrentAssets_t + PPE_t) / TotalAssets_t) / (1 - (CurrentAssets_t-1 + PPE_t-1) / TotalAssets_t-1)
=(1 - (3045.802 + 1492.681) / 4569.929) / (1 - (1377.138 + 1387.944) / 2953.048)
=0.00688107 / 0.06365152
=0.1081

4. SGI = Sales Growth Index

Ratio of Revenue 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.

SGI=Sales_t / Sales_t-1
=Revenue_t / Revenue_t-1
=14145.156 / 9127.057
=1.5498

5. DEPI = Depreciation Index

Measured as the ratio of the rate of Depreciation, Depletion and Amortization 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))
=(192.419 / (192.419 + 1387.944)) / (285.711 / (285.711 + 1492.681))
=0.1217562 / 0.16065693
=0.7579

Note: If the Depreciation, Depletion and Amortization data is not available, we assume that the depreciation rate is constant and set the Depreciation Index to 1.

6. SGAI = Sales, General and Administrative expenses Index

The ratio of Selling, General, & Admin. Expense(SGA) to Sales 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)
=(3751.822 / 14145.156) / (3077.273 / 9127.057)
=0.26523723 / 0.33715939
=0.7867

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 in leverage

LVGI=((LTD_t + CurrentLiabilities_t) / TotalAssets_t) / ((LTD_t-1 + CurrentLiabilities_t-1) / TotalAssets_t-1)
=((3529.201 + 2165.594) / 4569.929) / ((2278.797 + 1611.519) / 2953.048)
=1.24614518 / 1.31739003
=0.9459

8. TATA = Total Accruals to Total Assets

Total accruals calculated as the change in working capital accounts other than cash less depreciation.

TATA=(IncomefromContinuingOperations_t - CashFlowsfromOperations_t) / TotalAssets_t
=(NetIncome_t - NonOperatingIncome_t - CashFlowsfromOperations_t) / TotalAssets_t
=(184.996 - -8.633 - 1416.731) / 4569.929
=-0.2676

An M-Score of equal or less than -1.78 suggests that the company is unlikely to be a manipulator. An M-Score of greater than -1.78 signals that the company is likely to be a manipulator.

Wayfair has a M-score of -3.94 suggests that the company is unlikely to be a manipulator.


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