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GuruFocus has detected 2 Warning Signs with Winmark Corp $WINA.
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Winmark Corp (NAS:WINA)
Beneish M-Score
-2.28 (As of Today)

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.

Winmark Corp has a M-score of -2.28 suggests that the company is not a manipulator.

WINA' s Beneish M-Score Range Over the Past 10 Years
Min: -5.91   Max: 3.59
Current: -2.28

-5.91
3.59

During the past 13 years, the highest Beneish M-Score of Winmark Corp was 3.59. The lowest was -5.91. And the median was -2.84.


Definition

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 Winmark Corp 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 * 1.0676+0.528 * 0.9898+0.404 * 1.1511+0.892 * 1.0529+0.115 * 0.7905
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.935+4.679 * -0.015-0.327 * 0.626
=-2.28

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

This Year (Mar17) TTM:Last Year (Mar16) TTM:
Accounts Receivable was $1.51 Mil.
Revenue was 17.624 + 17.366 + 16.734 + 16.3 = $68.02 Mil.
Gross Profit was 16.909 + 17.049 + 16.235 + 15.712 = $65.91 Mil.
Total Current Assets was $20.80 Mil.
Total Assets was $47.40 Mil.
Property, Plant and Equipment(Net PPE) was $0.68 Mil.
Depreciation, Depletion and Amortization(DDA) was $0.41 Mil.
Selling, General & Admin. Expense(SGA) was $26.48 Mil.
Total Current Liabilities was $8.36 Mil.
Long-Term Debt was $35.63 Mil.
Net Income was 5.416 + 6.166 + 6.094 + 5.394 = $23.07 Mil.
Non Operating Income was 0 + 0 + 0 + 0 = $0.00 Mil.
Cash Flow from Operations was 8.734 + 5.726 + 6.78 + 2.54 = $23.78 Mil.
Accounts Receivable was $1.35 Mil.
Revenue was 16.18 + 16.948 + 16 + 15.477 = $64.61 Mil.
Gross Profit was 15.483 + 16.35 + 15.288 + 14.831 = $61.95 Mil.
Total Current Assets was $21.94 Mil.
Total Assets was $43.76 Mil.
Property, Plant and Equipment(Net PPE) was $1.03 Mil.
Depreciation, Depletion and Amortization(DDA) was $0.44 Mil.
Selling, General & Admin. Expense(SGA) was $26.89 Mil.
Total Current Liabilities was $9.95 Mil.
Long-Term Debt was $54.92 Mil.



1. DSRI = Days Sales in Receivables Index

Measured as the ratio of days’ sales in 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)
=(1.513 / 68.024) / (1.346 / 64.605)
=0.02224215 / 0.0208343
=1.0676

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)
=(61.952 / 64.605) / (65.905 / 68.024)
=0.95893507 / 0.96884923
=0.9898

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 plant, property and equipment to total assets.

AQI=(1 - (CurrentAssets_t + PPE_t) / TotalAssets_t) / (1 - (CurrentAssets_t-1 + PPE_t-1) / TotalAssets_t-1)
=(1 - (20.802 + 0.683) / 47.396) / (1 - (21.943 + 1.032) / 43.756)
=0.5466917 / 0.47492915
=1.1511

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.

SGI=Sales_t / Sales_t-1
=Revenue_t / Revenue_t-1
=68.024 / 64.605
=1.0529

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))
=(0.435 / (0.435 + 1.032)) / (0.41 / (0.41 + 0.683))
=0.29652352 / 0.37511436
=0.7905

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)
=(26.476 / 68.024) / (26.892 / 64.605)
=0.38921557 / 0.41625261
=0.935

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)
=((35.629 + 8.357) / 47.396) / ((54.919 + 9.946) / 43.756)
=0.928053 / 1.48242527
=0.626

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
=(23.07 - 0 - 23.78) / 47.396
=-0.015

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.

Winmark Corp has a M-score of -2.28 suggests that the company will not be a manipulator.


Related Terms

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


Historical Data

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

Winmark Corp Annual Data

Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15Dec16
DSRI 0.92121.08680.58560.06997.74880.01580.79890.91090.39151.5646
GMI 0.99170.98250.9790.92740.99161.00461.00540.98670.99520.9931
AQI 1.04950.79550.69481.29480.92911.13430.73681.14871.01451.1171
SGI 1.13871.13661.05291.10481.24591.01181.07291.09781.13520.9587
DEPI 0.82340.73391.93671.07710.84420.94141.09711.05910.80480.7903
SGAI 0.99490.87490.92010.95730.95890.88850.98151.01191.03390.914
LVGI 1.35110.93890.61920.81290.4492.89180.42052.26733.37290.6886
TATA -0.0504-0.0805-0.136-0.043-0.1063-0.0336-0.06440.0381-0.0106-0.0709
M-score -2.78-2.74-3.34-3.293.59-4.08-2.80-2.65-3.77-2.19

Winmark Corp Quarterly Data

Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16Dec16Mar17
DSRI 0.91090.95461.99961.67630.39151.18540.86641.11281.56461.0676
GMI 0.98670.98610.99370.99170.99521.00331.00290.99930.99310.9898
AQI 1.14870.99041.01121.03211.01450.95891.07941.01261.11711.1511
SGI 1.09781.1841.20891.16881.13520.9550.9470.96330.95871.0529
DEPI 1.05911.00520.87980.82760.80480.78480.77660.77630.79030.7905
SGAI 1.01191.0531.03211.01421.03390.95350.92860.9280.9140.935
LVGI 2.26730.63882.84962.71783.37294.09460.73910.71310.68860.626
TATA 0.0381-0.0237-0.02540.0221-0.0106-0.0197-0.0398-0.0544-0.0709-0.015
M-score -2.65-2.37-2.12-2.18-3.77-3.49-2.73-2.58-2.19-2.28
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