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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 -2.15.
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 * 1.1486||+||0.528 * 1.004||+||0.404 * 1.0554||+||0.892 * 1.0742||+||0.115 * 0.9333|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.1883||+||4.679 * -0.0677||-||0.327 * 1.0747|
|This Year (Dec14) TTM:||Last Year (Dec13) TTM:|
|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 $4,200 Mil.
Total Assets was $10,290 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 $2,191 Mil.
Long-Term Debt was $1,200 Mil.
Net Income was 201.891 + 262.661 + 273.946 + 268.948 = $1,007 Mil.
Non Operating Income was 6.152 + 0.825 + -1.179 + 0 = $6 Mil.
Cash Flow from Operations was 487.813 + 587.696 + 240.86 + 382.079 = $1,698 Mil.
|Accounts Receivable was $683 Mil.
Revenue was 1727.858 + 1625.153 + 1476.263 + 1340.729 = $6,170 Mil.
Gross Profit was 857.155 + 801.993 + 676.819 + 531.516 = $2,867 Mil.
Total Current Assets was $4,651 Mil.
Total Assets was $10,489 Mil.
Property, Plant and Equipment(Net PPE) was $656 Mil.
Depreciation, Depletion and Amortization(DDA) was $464 Mil.
Selling, General & Admin. Expense(SGA) was $469 Mil.
Total Current Liabilities was $1,231 Mil.
Long-Term Debt was $1,985 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)|
|=||(842.476 / 6627.701)||/||(682.809 / 6170.003)|
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)|
|=||(817.138 / 6170.003)||/||(739.77 / 6627.701)|
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 - (4200.125 + 724.357) / 10289.957)||/||(1 - (4650.718 + 655.794) / 10488.717)|
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))|
|=||(464.065 / (464.065 + 655.794))||/||(578.502 / (578.502 + 724.357))|
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)|
|=||(598.19 / 6627.701)||/||(468.622 / 6170.003)|
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)|
|=||((1199.696 + 2190.883) / 10289.957)||/||((1985.363 + 1230.58) / 10488.717)|
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|
|=||(1007.446 - 5.798||-||1698.448)||/||10289.957|
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 -2.63 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