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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 12.00. The lowest was -6.71. And the median was -2.17.
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 * 0.8739||+||0.528 * 1.1413||+||0.404 * 0.5724||+||0.892 * 0.8396||+||0.115 * 1.0282|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.1739||+||4.679 * -0.0712||-||0.327 * 1.0691|
|This Year (Dec15) TTM:||Last Year (Dec14) TTM:|
|Accounts Receivable was $618 Mil.|
Revenue was 1543.15 + 1452.285 + 1237.196 + 1332.241 = $5,565 Mil.
Gross Profit was 624.858 + 602.83 + 484.379 + 545.002 = $2,257 Mil.
Total Current Assets was $5,660 Mil.
Total Assets was $9,231 Mil.
Property, Plant and Equipment(Net PPE) was $817 Mil.
Depreciation, Depletion and Amortization(DDA) was $621 Mil.
Selling, General & Admin. Expense(SGA) was $590 Mil.
Total Current Liabilities was $2,003 Mil.
Long-Term Debt was $1,238 Mil.
Net Income was 135.469 + 133.011 + 80.973 + 39.025 = $388 Mil.
Non Operating Income was 0.447 + -1.759 + 0 + 0 = $-1 Mil.
Cash Flow from Operations was 433.979 + 274.972 + 28.864 + 308.865 = $1,047 Mil.
|Accounts Receivable was $842 Mil.
Revenue was 1735.254 + 1746.491 + 1634.011 + 1511.945 = $6,628 Mil.
Gross Profit was 739.77 + 817.138 + 759.65 + 751.29 = $3,068 Mil.
Total Current Assets was $4,195 Mil.
Total Assets was $10,274 Mil.
Property, Plant and Equipment(Net PPE) was $724 Mil.
Depreciation, Depletion and Amortization(DDA) was $579 Mil.
Selling, General & Admin. Expense(SGA) was $598 Mil.
Total Current Liabilities was $2,186 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)|
|=||(618.191 / 5564.872)||/||(842.476 / 6627.701)|
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)|
|=||(602.83 / 6627.701)||/||(624.858 / 5564.872)|
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 - (5659.786 + 817.13) / 9230.761)||/||(1 - (4195.198 + 724.357) / 10273.825)|
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))|
|=||(578.502 / (578.502 + 724.357))||/||(621.095 / (621.095 + 817.13))|
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)|
|=||(589.601 / 5564.872)||/||(598.19 / 6627.701)|
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)|
|=||((1237.776 + 2003.48) / 9230.761)||/||((1188.491 + 2185.956) / 10273.825)|
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|
|=||(388.478 - -1.312||-||1046.68)||/||9230.761|
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 -3.22 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