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Wells Fargo Beneish M-Score

: -2.28 (As of Today)
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Note: Financial institutions were excluded from the sample in Beneish paper when calculating Beneish M-Score. Thus, the prediction might not fit banks and insurance companies.

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 -2.28 no higher than -1.78, which implies that the company is unlikely to be a manipulator.

The historical rank and industry rank for Wells Fargo's Beneish M-Score or its related term are showing as below:

WFC' s Beneish M-Score Range Over the Past 10 Years
Min: -3.35   Med: -2.4   Max: 1.93
Current: -2.28

During the past 13 years, the highest Beneish M-Score of Wells Fargo was 1.93. The lowest was -3.35. And the median was -2.40.


Wells Fargo 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 Wells Fargo 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 * 1.1503+0.528 * 1+0.404 * 1.0806+0.892 * 0.97+0.115 * 1.0638
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0028+4.679 * 0.0052-0.327 * 0.9209
=-2.28

* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD.
* For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.

This Year (Jun22) TTM:Last Year (Jun21) TTM:
Total Receivables was $49,278 Mil.
Revenue was 17028 + 17592 + 20856 + 18834 = $74,310 Mil.
Gross Profit was 17028 + 17592 + 20856 + 18834 = $74,310 Mil.
Total Current Assets was $209,261 Mil.
Total Assets was $1,881,142 Mil.
Property, Plant and Equipment(Net PPE) was $18,225 Mil.
Depreciation, Depletion and Amortization(DDA) was $7,280 Mil.
Selling, General, & Admin. Expense(SGA) was $35,457 Mil.
Total Current Liabilities was $84,850 Mil.
Long-Term Debt & Capital Lease Obligation was $150,291 Mil.
Net Income was 3119 + 3671 + 5750 + 5122 = $17,662 Mil.
Non Operating Income was 0 + 0 + 0 + 0 = $0 Mil.
Cash Flow from Operations was 7588 + 199 + 4817 + -4810 = $7,794 Mil.
Total Receivables was $44,164 Mil.
Revenue was 20270 + 18532 + 18489 + 19316 = $76,607 Mil.
Gross Profit was 20270 + 18532 + 18489 + 19316 = $76,607 Mil.
Total Current Assets was $343,294 Mil.
Total Assets was $1,945,996 Mil.
Property, Plant and Equipment(Net PPE) was $19,571 Mil.
Depreciation, Depletion and Amortization(DDA) was $8,534 Mil.
Selling, General, & Admin. Expense(SGA) was $36,452 Mil.
Total Current Liabilities was $84,482 Mil.
Long-Term Debt & Capital Lease Obligation was $179,656 Mil.




1. DSRI = Days Sales in Receivables Index

Measured as the ratio of Revenue in Total Receivables 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)
=(49278 / 74310) / (44164 / 76607)
=0.6631409 / 0.57650084
=1.1503

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)
=(76607 / 76607) / (74310 / 74310)
=1 / 1
=1

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 - (209261 + 18225) / 1881142) / (1 - (343294 + 19571) / 1945996)
=0.87907027 / 0.8135325
=1.0806

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
=74310 / 76607
=0.97

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))
=(8534 / (8534 + 19571)) / (7280 / (7280 + 18225))
=0.30364704 / 0.28543423
=1.0638

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)
=(35457 / 74310) / (36452 / 76607)
=0.47714978 / 0.47583119
=1.0028

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)
=((150291 + 84850) / 1881142) / ((179656 + 84482) / 1945996)
=0.12499907 / 0.13573409
=0.9209

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
=(17662 - 0 - 7794) / 1881142
=0.0052

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.

Wells Fargo has a M-score of -2.28 suggests that the company is unlikely to be a manipulator.


Wells Fargo Beneish M-Score Related Terms

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Wells Fargo Business Description

Wells Fargo logo
Address
420 Montgomery Street, San Francisco, CA, USA, 94104
Wells Fargo is one of the largest banks in the United States, with approximately $1.9 trillion in balance sheet assets. The company is split into four primary segments: consumer banking, commercial banking, corporate and investment banking, and wealth and investment management. It is almost entirely focused on the U.S.
Executives
Davis Richard K director 800 NICOLLET MALL MINNEAPOLIS MN 55402
Norwood Felicia F director 120 MONUMENT CIRCLE INDIANAPOLIS IN 46204
Morken Cecelia director 26025 MUREAU ROAD CALABASAS CA 91302
Ling Bei officer: Sr. Executive Vice President 30 HUDSON YARDS NEW YORK NY 10001
Hranicky Kyle G officer: Sr. Executive Vice President 1000 LOUISIANA STREET HOUSTON TX 77002
Santos Kleber officer: Sr. Executive Vice President 1680 CAPITAL ONE DRIVE MCLEAN VA 22102
Williams Ather Iii officer: Sr. Executive Vice President 30 HUDSON YARDS NEW YORK NY 10001
Santomassimo Michael P. officer: Sr. EVP & CFO 225 LIBERTY STREET NEW YORK NY 10286
Chancy Mark A director 303 PEACHTREE ST. 30TH FLOOR ATLANTA GA 30308
Owens Lester officer: Sr. Executive Vice President 240 GREENWICH STREET NEW YORK NY 10286
Sommers Barry officer: Sr. Executive Vice President 30 HUDSON YARDS NEW YORK NY 10001
Weinbach Michael S officer: Sr. Executive Vice President 30 HUDSON YARDS NEW YORK NY 10001
Black Steven D director C/O JPMORGAN CHASE & CO. 270 PARK AVENUE NEW YORK NY 10017
Carr Muneera S officer: EVP, CAO & Controller 1717 MAIN STREET MAIL CODE 6500 DALLAS TX 75201
Patterson Ellen R officer: Sr. EVP and General Counsel 30 HUDSON YARDS NEW YORK NY 10001
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