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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 -2.17.
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 * 0.9056||+||0.528 * 1.1413||+||0.404 * 1.0059||+||0.892 * 0.9311||+||0.115 * 1.0005|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.2952||+||4.679 * -0.0913||-||0.327 * 1.2197|
|This Year (Jun15) TTM:||Last Year (Jun14) TTM:|
|Accounts Receivable was $641 Mil.|
Revenue was 1237.196 + 1332.241 + 1735.254 + 1746.491 = $6,051 Mil.
Gross Profit was 484.379 + 545.002 + 739.77 + 817.138 = $2,586 Mil.
Total Current Assets was $3,657 Mil.
Total Assets was $9,149 Mil.
Property, Plant and Equipment(Net PPE) was $805 Mil.
Depreciation, Depletion and Amortization(DDA) was $620 Mil.
Selling, General & Admin. Expense(SGA) was $624 Mil.
Total Current Liabilities was $2,037 Mil.
Long-Term Debt was $1,223 Mil.
Net Income was 80.973 + 39.025 + 201.891 + 262.661 = $585 Mil.
Non Operating Income was 0 + 0 + 6.152 + 0.825 = $7 Mil.
Cash Flow from Operations was 28.864 + 308.865 + 487.813 + 587.696 = $1,413 Mil.
|Accounts Receivable was $760 Mil.
Revenue was 1634.011 + 1511.945 + 1727.858 + 1625.153 = $6,499 Mil.
Gross Profit was 759.65 + 751.29 + 857.155 + 801.993 = $3,170 Mil.
Total Current Assets was $4,615 Mil.
Total Assets was $10,730 Mil.
Property, Plant and Equipment(Net PPE) was $650 Mil.
Depreciation, Depletion and Amortization(DDA) was $502 Mil.
Selling, General & Admin. Expense(SGA) was $517 Mil.
Total Current Liabilities was $1,957 Mil.
Long-Term Debt was $1,177 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)|
|=||(640.842 / 6051.182)||/||(759.967 / 6498.967)|
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)|
|=||(545.002 / 6498.967)||/||(484.379 / 6051.182)|
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 - (3657.356 + 804.764) / 9149.431)||/||(1 - (4614.712 + 650.223) / 10729.699)|
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))|
|=||(501.654 / (501.654 + 650.223))||/||(620.342 / (620.342 + 804.764))|
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)|
|=||(623.546 / 6051.182)||/||(517.037 / 6498.967)|
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)|
|=||((1222.642 + 2037.06) / 9149.431)||/||((1177.273 + 1956.783) / 10729.699)|
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|
|=||(584.55 - 6.977||-||1413.238)||/||9149.431|
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 -3.10 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