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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 -2.16.
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 * 0.9712||+||0.528 * 1.097||+||0.404 * 1.016||+||0.892 * 1.0168||+||0.115 * 0.9788|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.2491||+||4.679 * -0.0902||-||0.327 * 1.2133|
|This Year (Mar15) TTM:||Last Year (Mar14) TTM:|
|Accounts Receivable was $589 Mil.|
Revenue was 1332.241 + 1735.254 + 1746.491 + 1634.011 = $6,448 Mil.
Gross Profit was 545.002 + 739.77 + 817.138 + 759.65 = $2,862 Mil.
Total Current Assets was $3,753 Mil.
Total Assets was $9,461 Mil.
Property, Plant and Equipment(Net PPE) was $770 Mil.
Depreciation, Depletion and Amortization(DDA) was $598 Mil.
Selling, General & Admin. Expense(SGA) was $622 Mil.
Total Current Liabilities was $2,091 Mil.
Long-Term Debt was $1,211 Mil.
Net Income was 39.025 + 201.891 + 262.661 + 273.946 = $778 Mil.
Non Operating Income was 0 + 6.152 + 0.825 + -1.179 = $6 Mil.
Cash Flow from Operations was 308.865 + 487.813 + 587.696 + 240.86 = $1,625 Mil.
|Accounts Receivable was $597 Mil.
Revenue was 1511.945 + 1727.858 + 1625.153 + 1476.263 = $6,341 Mil.
Gross Profit was 751.29 + 857.155 + 801.993 + 676.819 = $3,087 Mil.
Total Current Assets was $4,508 Mil.
Total Assets was $10,586 Mil.
Property, Plant and Equipment(Net PPE) was $640 Mil.
Depreciation, Depletion and Amortization(DDA) was $479 Mil.
Selling, General & Admin. Expense(SGA) was $490 Mil.
Total Current Liabilities was $1,878 Mil.
Long-Term Debt was $1,166 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)|
|=||(589.246 / 6447.997)||/||(596.669 / 6341.219)|
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)|
|=||(739.77 / 6341.219)||/||(545.002 / 6447.997)|
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 - (3752.986 + 769.933) / 9461.221)||/||(1 - (4508.023 + 639.653) / 10586.371)|
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))|
|=||(478.584 / (478.584 + 639.653))||/||(598.27 / (598.27 + 769.933))|
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)|
|=||(622.416 / 6447.997)||/||(490.032 / 6341.219)|
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)|
|=||((1211.097 + 2090.676) / 9461.221)||/||((1166.497 + 1878.395) / 10586.371)|
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|
|=||(777.523 - 5.798||-||1625.234)||/||9461.221|
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 -2.97 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