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GuruFocus has detected 1 Warning Sign with YRC Worldwide Inc $YRCW.
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YRC Worldwide Inc (NAS:YRCW)
Beneish M-Score
-2.84 (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.

YRC Worldwide Inc has a M-score of -2.84 suggests that the company is not a manipulator.

YRCW' s Beneish M-Score Range Over the Past 10 Years
Min: -5.32   Max: 1.48
Current: -2.84

-5.32
1.48

During the past 13 years, the highest Beneish M-Score of YRC Worldwide Inc was 1.48. The lowest was -5.32. And the median was -2.80.


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 YRC Worldwide 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 * 1.0695+0.528 * 1.0058+0.404 * 0.521+0.892 * 0.9961+0.115 * 0.967
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9996+4.679 * -0.0486-0.327 * 1.0112
=-2.84

* 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 $494 Mil.
Revenue was 1170.6 + 1148.3 + 1221.3 + 1207.6 = $4,748 Mil.
Gross Profit was 819.8 + 800.3 + 857.6 + 872.3 = $3,350 Mil.
Total Current Assets was $789 Mil.
Total Assets was $1,728 Mil.
Property, Plant and Equipment(Net PPE) was $845 Mil.
Depreciation, Depletion and Amortization(DDA) was $156 Mil.
Selling, General & Admin. Expense(SGA) was $2,847 Mil.
Total Current Liabilities was $545 Mil.
Long-Term Debt was $973 Mil.
Net Income was -25.3 + -7.5 + 13.9 + 27.1 = $8 Mil.
Non Operating Income was -1 + 2.8 + 1.2 + 0.8 = $4 Mil.
Cash Flow from Operations was -25.9 + 17.1 + 38.5 + 58.6 = $88 Mil.
Accounts Receivable was $464 Mil.
Revenue was 1120.3 + 1142.7 + 1244.9 + 1258.4 = $4,766 Mil.
Gross Profit was 814.6 + 812.3 + 878.2 + 877.6 = $3,383 Mil.
Total Current Assets was $753 Mil.
Total Assets was $1,864 Mil.
Property, Plant and Equipment(Net PPE) was $917 Mil.
Depreciation, Depletion and Amortization(DDA) was $163 Mil.
Selling, General & Admin. Expense(SGA) was $2,859 Mil.
Total Current Liabilities was $575 Mil.
Long-Term Debt was $1,044 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)
=(493.8 / 4747.8) / (463.5 / 4766.3)
=0.10400607 / 0.09724524
=1.0695

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)
=(3382.7 / 4766.3) / (3350 / 4747.8)
=0.70971194 / 0.70558996
=1.0058

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 - (788.9 + 845.4) / 1727.9) / (1 - (753.2 + 916.8) / 1863.8)
=0.0541698 / 0.10398111
=0.521

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
=4747.8 / 4766.3
=0.9961

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))
=(162.8 / (162.8 + 916.8)) / (156.2 / (156.2 + 845.4))
=0.15079659 / 0.15595048
=0.967

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)
=(2846.7 / 4747.8) / (2859 / 4766.3)
=0.59958296 / 0.59983635
=0.9996

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)
=((972.9 + 545.2) / 1727.9) / ((1044.2 + 575.1) / 1863.8)
=0.87858094 / 0.8688164
=1.0112

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
=(8.2 - 3.8 - 88.3) / 1727.9
=-0.0486

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.

YRC Worldwide Inc has a M-score of -2.84 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.

YRC Worldwide Inc Annual Data

Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15Dec16
DSRI 0.92970.83880.9711.1230.95930.96860.99870.97990.95281.08
GMI 0.95631.05480.98530.98531.04970.96731.00211.00120.94610.9861
AQI 0.72110.29811.51160.91121.18330.93320.73451.40361.56420.9158
SGI 0.970.92920.54480.88991.12320.99621.00311.04180.95340.9721
DEPI 1.11150.90450.87221.04850.91780.95560.9790.96610.8240.9053
SGAI 1.03190.98761.25150.84550.92680.99411.00290.99351.0371.0125
LVGI 1.15521.33581.00591.11551.13571.08421.06560.90231.01711.0108
TATA -0.2032-0.3027-0.1313-0.1205-0.1035-0.0403-0.0493-0.0589-0.08-0.0482
M-score -3.70-4.48-3.39-3.08-2.83-2.78-2.84-2.54-2.77-2.71

YRC Worldwide Inc Quarterly Data

Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16Dec16Mar17
DSRI 0.97990.93740.92220.93010.95280.95160.99661.00391.081.0695
GMI 1.00120.98270.96340.95030.94610.94880.95460.97020.98611.0058
AQI 1.40361.30881.24961.24611.56420.86780.58160.54010.91580.521
SGI 1.04181.02660.99920.97010.95340.94490.94590.95610.97210.9961
DEPI 0.96610.95160.94410.93720.8240.95920.98160.97740.90530.967
SGAI 0.99350.98610.99611.00691.0371.04961.05891.05131.01250.9996
LVGI 0.90231.02441.00741.00811.01711.01391.00951.00461.01081.0112
TATA -0.0589-0.0438-0.0568-0.0642-0.08-0.0808-0.081-0.0713-0.0482-0.0486
M-score -2.54-2.61-2.74-2.81-2.77-3.05-3.12-3.06-2.71-2.84
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