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GuruFocus has detected 4 Warning Signs with Wal-Mart Stores Inc $WMT.
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Wal-Mart Stores Inc (NYSE:WMT)
Beneish M-Score
-2.81 (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.

Wal-Mart Stores Inc has a M-score of -2.81 suggests that the company is not a manipulator.

WMT' s Beneish M-Score Range Over the Past 10 Years
Min: -3.13   Max: -0.11
Current: -2.81

-3.13
-0.11

During the past 13 years, the highest Beneish M-Score of Wal-Mart Stores Inc was -0.11. The lowest was -3.13. And the median was -2.58.


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 Wal-Mart Stores Inc 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 * 1.0036+0.528 * 0.9851+0.404 * 1.2144+0.892 * 1.0089+0.115 * 0.9179
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0307+4.679 * -0.0857-0.327 * 0.9997
=-2.81

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

This Year (Apr17) TTM:Last Year (Apr16) TTM:
Accounts Receivable was $5,252 Mil.
Revenue was 117542 + 130936 + 118179 + 120854 = $487,511 Mil.
Gross Profit was 29854 + 33193 + 30695 + 31369 = $125,111 Mil.
Total Current Assets was $57,336 Mil.
Total Assets was $199,718 Mil.
Property, Plant and Equipment(Net PPE) was $114,169 Mil.
Depreciation, Depletion and Amortization(DDA) was $10,243 Mil.
Selling, General & Admin. Expense(SGA) was $102,385 Mil.
Total Current Liabilities was $74,193 Mil.
Long-Term Debt was $40,025 Mil.
Net Income was 3039 + 3757 + 3034 + 3773 = $13,603 Mil.
Non Operating Income was 0 + 0 + 0 + 0 = $0 Mil.
Cash Flow from Operations was 5385 + 11886 + 4713 + 8738 = $30,722 Mil.
Accounts Receivable was $5,187 Mil.
Revenue was 115904 + 129667 + 117408 + 120229 = $483,208 Mil.
Gross Profit was 29360 + 32668 + 29962 + 30173 = $122,163 Mil.
Total Current Assets was $59,097 Mil.
Total Assets was $198,705 Mil.
Property, Plant and Equipment(Net PPE) was $116,494 Mil.
Depreciation, Depletion and Amortization(DDA) was $9,523 Mil.
Selling, General & Admin. Expense(SGA) was $98,463 Mil.
Total Current Liabilities was $70,282 Mil.
Long-Term Debt was $43,393 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)
=(5252 / 487511) / (5187 / 483208)
=0.01077309 / 0.01073451
=1.0036

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)
=(122163 / 483208) / (125111 / 487511)
=0.25281659 / 0.25663216
=0.9851

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 - (57336 + 114169) / 199718) / (1 - (59097 + 116494) / 198705)
=0.14126418 / 0.11632319
=1.2144

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
=487511 / 483208
=1.0089

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))
=(9523 / (9523 + 116494)) / (10243 / (10243 + 114169))
=0.07556917 / 0.08233129
=0.9179

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)
=(102385 / 487511) / (98463 / 483208)
=0.21001577 / 0.20376939
=1.0307

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)
=((40025 + 74193) / 199718) / ((43393 + 70282) / 198705)
=0.57189637 / 0.57207921
=0.9997

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
=(13603 - 0 - 30722) / 199718
=-0.0857

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.

Wal-Mart Stores Inc has a M-score of -2.81 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.

Wal-Mart Stores Inc Annual Data

Jan08Jan09Jan10Jan11Jan12Jan13Jan14Jan15Jan16Jan17
DSRI 1.17691.00391.05151.18811.10221.08560.97120.99560.83581.0295
GMI 0.98680.98150.97661.00251.01471.00511.00110.99990.9880.9797
AQI 1.24840.86531.02230.9821.16730.9660.96110.92380.98791.1855
SGI 1.08971.0681.00921.03371.05851.05011.01581.01960.99271.0078
DEPI 0.92070.95941.00660.98850.98270.99370.96820.95970.97140.9252
SGAI 1.00861.03361.01780.98850.98730.9941.01331.00291.04641.0415
LVGI 1.02770.97940.98041.04970.99850.98580.99780.96071.01871.0065
TATA -0.0466-0.0596-0.0696-0.0402-0.0442-0.0423-0.0353-0.06-0.0636-0.09
M-score -2.38-2.76-2.75-2.49-2.46-2.56-2.68-2.77-2.96-2.82

Wal-Mart Stores Inc Quarterly Data

Jan15Apr15Jul15Oct15Jan16Apr16Jul16Oct16Jan17Apr17
DSRI 0.99560.93720.84920.82250.83580.89661.00371.0651.02951.0036
GMI 0.99990.99830.99710.99160.9880.9830.9750.97570.97970.9851
AQI 0.92380.91840.96810.95990.98791.01841.01491.21911.18551.2144
SGI 1.01961.01751.01071.00050.99270.99520.99631.00121.00781.0089
DEPI 0.95970.9540.95240.97950.97140.9790.95370.93970.92520.9179
SGAI 1.00291.00711.01351.02321.04641.05221.05461.0551.04151.0307
LVGI 0.96070.97780.98471.00241.01871.021.02931.00511.00650.9997
TATA -0.06-0.0546-0.0568-0.0634-0.0636-0.074-0.0884-0.0849-0.09-0.0857
M-score -2.77-2.81-2.89-2.97-2.96-2.95-2.92-2.76-2.82-2.81
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