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Wells Fargo (Wells Fargo) Beneish M-Score : -2.40 (As of May. 30, 2024)


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What is Wells Fargo Beneish M-Score?

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 -2.4 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: -2.72   Med: -2.43   Max: -2.14
Current: -2.4

During the past 13 years, the highest Beneish M-Score of Wells Fargo was -2.14. The lowest was -2.72. And the median was -2.43.


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 * 1.0284+0.528 * 1+0.404 * 1.0001+0.892 * 1.0693+0.115 * 1.029
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.981+4.679 * -0.00105-0.327 * 1.0422
=-2.40

* 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 (Mar24) TTM:Last Year (Mar23) TTM:
Total Receivables was $55,850 Mil.
Revenue was 20863 + 20478 + 20857 + 20533 = $82,731 Mil.
Gross Profit was 20863 + 20478 + 20857 + 20533 = $82,731 Mil.
Total Current Assets was $0 Mil.
Total Assets was $1,959,153 Mil.
Property, Plant and Equipment(Net PPE) was $18,385 Mil.
Depreciation, Depletion and Amortization(DDA) was $6,538 Mil.
Selling, General, & Admin. Expense(SGA) was $36,748 Mil.
Total Current Liabilities was $0 Mil.
Long-Term Debt & Capital Lease Obligation was $187,764 Mil.
Net Income was 4619 + 3446 + 5767 + 4938 = $18,770 Mil.
Non Operating Income was 0 + 0 + 0 + 0 = $0 Mil.
Cash Flow from Operations was -12125 + 18202 + 15505 + -755 = $20,827 Mil.
Total Receivables was $50,787 Mil.
Revenue was 20729 + 20034 + 19566 + 17040 = $77,369 Mil.
Gross Profit was 20729 + 20034 + 19566 + 17040 = $77,369 Mil.
Total Current Assets was $0 Mil.
Total Assets was $1,886,400 Mil.
Property, Plant and Equipment(Net PPE) was $17,831 Mil.
Depreciation, Depletion and Amortization(DDA) was $6,593 Mil.
Selling, General, & Admin. Expense(SGA) was $35,033 Mil.
Total Current Liabilities was $0 Mil.
Long-Term Debt & Capital Lease Obligation was $173,466 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)
=(55850 / 82731) / (50787 / 77369)
=0.675079 / 0.656426
=1.0284

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)
=(77369 / 77369) / (82731 / 82731)
=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 - (0 + 18385) / 1959153) / (1 - (0 + 17831) / 1886400)
=0.990616 / 0.990548
=1.0001

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
=82731 / 77369
=1.0693

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))
=(6593 / (6593 + 17831)) / (6538 / (6538 + 18385))
=0.269939 / 0.262328
=1.029

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)
=(36748 / 82731) / (35033 / 77369)
=0.444187 / 0.452804
=0.981

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)
=((187764 + 0) / 1959153) / ((173466 + 0) / 1886400)
=0.095839 / 0.091956
=1.0422

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
=(18770 - 0 - 20827) / 1959153
=-0.00105

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 -2.40 suggests that the company is unlikely to be a manipulator.


Wells Fargo Beneish M-Score Related Terms

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Wells Fargo (Wells Fargo) Business Description

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 has 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
Richard K Davis director 800 NICOLLET MALL, MINNEAPOLIS MN 55402
Thomas R Nides officer: Vice Chairman C/O WELLS FARGO & COMPANY, 420 MONTGOMERY STREET, SAN FRANCISCO CA 94104
Tracy M Kerrins officer: Sr. Executive Vice President 300 S BREVARD STREET, CHARLOTTE NC 28202
Kyle G Hranicky officer: Sr. Executive Vice President 1000 LOUISIANA STREET, HOUSTON TX 77002
Felicia F Norwood director 120 MONUMENT CIRCLE, INDIANAPOLIS IN 46204
Kleber Santos officer: Sr. Executive Vice President 1680 CAPITAL ONE DRIVE, MCLEAN VA 22102
Ellen R Patterson officer: Sr. EVP and General Counsel 30 HUDSON YARDS, NEW YORK NY 10001
Kristy Fercho officer: Sr. Executive Vice President 5151 CORPORATE DRIVE, TROY MI 48098
Cecelia Morken director 26025 MUREAU ROAD, CALABASAS CA 91302
Beurden Saul Van officer: Sr. Executive Vice President 150 EAST 42ND STREET, NEW YORK NY 10017
Bei Ling officer: Sr. Executive Vice President 30 HUDSON YARDS, NEW YORK NY 10001
Ather Iii Williams officer: Sr. Executive Vice President 30 HUDSON YARDS, NEW YORK NY 10001
Michael P. Santomassimo officer: Sr. EVP & CFO 225 LIBERTY STREET, NEW YORK NY 10286
Mark A Chancy director 303 PEACHTREE ST., 30TH FLOOR, ATLANTA GA 30308
Lester Owens officer: Sr. Executive Vice President 240 GREENWICH STREET, NEW YORK NY 10286