Warner Music Group (WBO:WMG) Beneish M-Score : -2.44 (As of Apr. 25, 2024)

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What is Warner Music Group Beneish M-Score?

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 -2.44 no higher than -1.78, which implies that the company is unlikely to be a manipulator.

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

WBO:WMG' s Beneish M-Score Range Over the Past 10 Years
Min: -3.19 Med: -2.6 Max: -2.04
Current: -2.44

During the past 13 years, the highest Beneish M-Score of Warner Music Group was -2.04. The lowest was -3.19. And the median was -2.60.

Warner Music Group Beneish M-Score Historical Data

The historical data trend for Warner Music Group's Beneish M-Score can be seen below:

* 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.

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Warner Music Group Beneish M-Score Chart

Warner Music Group Annual Data

Trend

Sep14

Sep15

Sep16

Sep17

Sep18

Sep19

Sep20

Sep21

Sep22

Sep23

Beneish M-Score

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-2.04

-3.14

-2.54

-2.53

-2.47

Warner Music Group Quarterly Data
	Mar19	Jun19	Sep19	Dec19	Mar20	Jun20	Sep20	Dec20	Mar21	Jun21	Sep21	Dec21	Mar22	Jun22	Sep22	Dec22	Mar23	Jun23	Sep23	Dec23
Beneish M-Score	Get a 7-Day Free Trial															-2.67	-2.61	-2.55	-2.47	-2.44

Competitive Comparison of Warner Music Group's Beneish M-Score

For the Entertainment subindustry, Warner Music Group's Beneish M-Score, along with its competitors' market caps and Beneish M-Score data, can be viewed below:

* 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. Note that "N/A" values will not show up in the chart.

Warner Music Group's Beneish M-Score Distribution in the Media - Diversified Industry

For the Media - Diversified industry and Communication Services sector, Warner Music Group's Beneish M-Score distribution charts can be found below:

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

Warner Music Group 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 Warner Music Group for today is based on a combination of the following eight different indices:

-4.84

0.92 * DSRI

0.528 * GMI

0.404 * AQI

0.892 * SGI

0.115 * DEPI

-4.84

0.92 * 1.0931

0.528 * 1.0027

0.404 * 0.997

0.892 * 1.0577

0.115 * 1.0833

0.172 * SGAI

4.679 * TATA

0.327 * LVGI

0.172 * 0.9496

4.679 * -0.033012

0.327 * 0.9615

-2.47

This Year (Dec23) TTM:

Last Year (Dec22) TTM:

Total Receivables was €1,096 Mil.
Revenue was 1602.916 + 1486.082 + 1443.572 + 1306.666 = €5,839 Mil.
Gross Profit was 795.956 + 694.317 + 659.022 + 633.252 = €2,783 Mil.
Total Current Assets was €2,399 Mil.
Total Assets was €8,245 Mil.
Property, Plant and Equipment(Net PPE) was €649 Mil.
Depreciation, Depletion and Amortization(DDA) was €305 Mil.
Selling, General, & Admin. Expense(SGA) was €1,727 Mil.
Total Current Liabilities was €3,434 Mil.
Long-Term Debt & Capital Lease Obligation was €3,900 Mil.
Net Income was 145.803 + 142.424 + 112.606 + 31.756 = €433 Mil.
Non Operating Income was -30.261 + 34.669 + 14.768 + -28.954 = €-10 Mil.
Cash Flow from Operations was 268.681 + 316.706 + 134.758 + -5.604 = €715 Mil.

Total Receivables was €948 Mil.
Revenue was 1404.672 + 1511.97 + 1354.672 + 1249.408 = €5,521 Mil.
Gross Profit was 686.288 + 704.98 + 630.036 + 616.532 = €2,638 Mil.
Total Current Assets was €2,209 Mil.
Total Assets was €7,674 Mil.
Property, Plant and Equipment(Net PPE) was €614 Mil.
Depreciation, Depletion and Amortization(DDA) was €325 Mil.
Selling, General, & Admin. Expense(SGA) was €1,720 Mil.
Total Current Liabilities was €3,154 Mil.
Long-Term Debt & Capital Lease Obligation was €3,946 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)
	=	(1095.815 / 5839.236)	/	(947.776 / 5520.722)
	=	0.187664	/	0.171676
	=	1.0931

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)
	=	(2637.836 / 5520.722)	/	(2782.547 / 5839.236)
	=	0.477806	/	0.476526
	=	1.0027

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 - (2398.872 + 649.236) / 8244.747)	/	(1 - (2208.96 + 613.6) / 7673.776)
	=	0.630297	/	0.632181
	=	0.997

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
	=	5839.236	/	5520.722
	=	1.0577

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))
	=	(325.23 / (325.23 + 613.6))	/	(305.2 / (305.2 + 649.236))
	=	0.346421	/	0.31977
	=	1.0833

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)
	=	(1727.364 / 5839.236)	/	(1719.858 / 5520.722)
	=	0.29582	/	0.311528
	=	0.9496

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)
	=	((3900.001 + 3434.165) / 8244.747)	/	((3945.92 + 3153.904) / 7673.776)
	=	0.889556	/	0.925206
	=	0.9615

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
	=	(432.589 - -9.778	-	714.541)	/	8244.747
	=	-0.033012

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.

Warner Music Group has a M-score of -2.47 suggests that the company is unlikely to be a manipulator.

Warner Music Group Beneish M-Score Related Terms

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Warner Music Group (WBO:WMG) Business Description

Industry

GURUFOCUS.COM » STOCK LIST » Communication Services » Media - Diversified » Warner Music Group Corp (WBO:WMG) » Definitions » Beneish M-Score

Comparable Companies

Traded in Other Exchanges

WMG:USA WA4:Germany W1MG34:Brazil

Address

1633 Broadway, New York, NY, USA, 10019

Website

https://www.wmg.com

Warner Music Group is the third largest of the three major global record labels, with Vivendi's Universal Music in first and Sony Music in second. Warner's larger segment, recorded music, consists of iconic labels like Atlantic Records, Warner Records, and Parlophone Records and popular artists such as Ed Sheeran, Cardi B, Dua Lipa, and Blake Shelton. Warner Chappell, the firm's publishing arm, is the home to over 65,000 composers and songwriters with over 1 million copyrights represented. Warner is controlled by Access Industries, which owns an 84% economic interest and 99% of voting rights.