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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.
During the past 13 years, the highest Beneish M-Score of SanDisk Corp was 25.25. The lowest was -10.19. And the median was -2.18.
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 SanDisk 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 * 0.9784||+||0.528 * 1.1677||+||0.404 * 0.9648||+||0.892 * 0.8696||+||0.115 * 1.0255|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.2001||+||4.679 * -0.0716||-||0.327 * 1.1363|
|This Year (Sep15) TTM:||Last Year (Sep14) TTM:|
|Accounts Receivable was $741 Mil.|
Revenue was 1452.285 + 1237.196 + 1332.241 + 1735.254 = $5,757 Mil.
Gross Profit was 602.83 + 484.379 + 545.002 + 739.77 = $2,372 Mil.
Total Current Assets was $3,614 Mil.
Total Assets was $9,073 Mil.
Property, Plant and Equipment(Net PPE) was $831 Mil.
Depreciation, Depletion and Amortization(DDA) was $626 Mil.
Selling, General & Admin. Expense(SGA) was $592 Mil.
Total Current Liabilities was $1,139 Mil.
Long-Term Debt was $2,138 Mil.
Net Income was 133.011 + 80.973 + 39.025 + 201.891 = $455 Mil.
Non Operating Income was -1.759 + 0 + 0 + 6.152 = $4 Mil.
Cash Flow from Operations was 274.972 + 28.864 + 308.865 + 487.813 = $1,101 Mil.
|Accounts Receivable was $871 Mil.
Revenue was 1746.491 + 1634.011 + 1511.945 + 1727.858 = $6,620 Mil.
Gross Profit was 817.138 + 759.65 + 751.29 + 857.155 = $3,185 Mil.
Total Current Assets was $4,354 Mil.
Total Assets was $10,708 Mil.
Property, Plant and Equipment(Net PPE) was $692 Mil.
Depreciation, Depletion and Amortization(DDA) was $545 Mil.
Selling, General & Admin. Expense(SGA) was $567 Mil.
Total Current Liabilities was $2,215 Mil.
Long-Term Debt was $1,188 Mil.
1. DSRI = Days Sales in Receivables Index
A large increase in DSR could be indicative of revenue inflation.
|DSRI||=||(Receivables_t / Revenue_t)||/||(Receivables_t-1 / Revenue_t-1)|
|=||(740.637 / 5756.976)||/||(870.552 / 6620.305)|
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.
|=||(GrossProfit_t-1 / Revenue_t-1)||/||(GrossProfit_t / Revenue_t)|
|=||(484.379 / 6620.305)||/||(602.83 / 5756.976)|
3. AQI = Asset Quality Index
AQI is the ratio of asset quality in year t to year t-1.
|AQI||=||(1 - (CurrentAssets_t + PPE_t) / TotalAssets_t)||/||(1 - (CurrentAssets_t-1 + PPE_t-1) / TotalAssets_t-1)|
|=||(1 - (3613.646 + 831.064) / 9073.003)||/||(1 - (4354.134 + 692.362) / 10708.261)|
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.
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))|
|=||(544.885 / (544.885 + 692.362))||/||(625.588 / (625.588 + 831.064))|
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)|
|=||(591.766 / 5756.976)||/||(567.065 / 6620.305)|
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)|
|=||((2137.737 + 1139.01) / 9073.003)||/||((1188.356 + 2214.946) / 10708.261)|
8. TATA = Total Accruals to Total Assets
Total accruals calculated as the change in working capital accounts other than cash less depreciation.
|=||(NetIncome_t - NonOperatingIncome_t||-||CashFlowsfromOperations_t)||/||TotalAssets_t|
|=||(454.9 - 4.393||-||1100.514)||/||9073.003|
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.
SanDisk Corp has a M-score of -2.95 suggests that the company will not be a manipulator.
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
SanDisk Corp Annual Data
SanDisk Corp Quarterly Data