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VMWare Inc (NYSE:VMW)
Beneish M-Score
-2.85 (As of Today)

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.

VMWare Inc has a M-score of -2.85 suggests that the company is not a manipulator.

VMW' s 10-Year Beneish M-Score Range
Min: -3.8   Max: -2.53
Current: -2.85

-3.8
-2.53

During the past 10 years, the highest Beneish M-Score of VMWare Inc was -2.53. The lowest was -3.80. And the median was -2.87.


Definition

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 VMWare Inc 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 * 1.0343+0.528 * 0.9915+0.404 * 1.0432+0.892 * 1.1498+0.115 * 1.2723
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0286+4.679 * -0.1105-0.327 * 1.1803
=-2.85

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.

This Year (Jun14) TTM:Last Year (Jun13) TTM:
Accounts Receivable was $1,119 Mil.
Revenue was 1457 + 1360 + 1483 + 1289 = $5,589 Mil.
Gross Profit was 1239 + 1159 + 1291 + 1106 = $4,795 Mil.
Total Current Assets was $8,161 Mil.
Total Assets was $14,159 Mil.
Property, Plant and Equipment(Net PPE) was $936 Mil.
Depreciation, Depletion and Amortization(DDA) was $322 Mil.
Selling, General & Admin. Expense(SGA) was $2,528 Mil.
Total Current Liabilities was $3,641 Mil.
Long-Term Debt was $1,500 Mil.
Net Income was 167 + 199 + 335 + 261 = $962 Mil.
Non Operating Income was 0 + 0 + 29 + 15 = $44 Mil.
Cash Flow from Operations was 409 + 750 + 687 + 637 = $2,483 Mil.
Accounts Receivable was $941 Mil.
Revenue was 1243 + 1191 + 1293.155 + 1133.684 = $4,861 Mil.
Gross Profit was 1070 + 1009 + 1101.331 + 954.322 = $4,135 Mil.
Total Current Assets was $6,584 Mil.
Total Assets was $11,147 Mil.
Property, Plant and Equipment(Net PPE) was $743 Mil.
Depreciation, Depletion and Amortization(DDA) was $359 Mil.
Selling, General & Admin. Expense(SGA) was $2,138 Mil.
Total Current Liabilities was $2,979 Mil.
Long-Term Debt was $450 Mil.



1. DSRI = Days Sales in Receivables Index

Measured as the ratio of days’ sales in receivables in year t to year t-1.

A large increase in DSR could be indicative of revenue inflation.

DSRI=(Receivables_t / Revenue_t) / (Receivables_t-1 / Revenue_t-1)
=(1119 / 5589) / (940.9 / 4860.839)
=0.20021471 / 0.19356741
=1.0343

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.

GMI=GrossMargin_t-1 / GrossMargin_t
=(GrossProfit_t-1 / Revenue_t-1) / (GrossProfit_t / Revenue_t)
=(1159 / 4860.839) / (1239 / 5589)
=0.8506048 / 0.85793523
=0.9915

3. AQI = Asset Quality Index

AQI is the ratio of asset quality in year t to year t-1.

Asset quality is measured as the ratio of non-current assets other than plant, property and equipment to total assets.

AQI=(1 - (CurrentAssets_t + PPE_t) / TotalAssets_t) / (1 - (CurrentAssets_t-1 + PPE_t-1) / TotalAssets_t-1)
=(1 - (8161 + 936) / 14159) / (1 - (6583.9 + 742.8) / 11146.5)
=0.35751112 / 0.34269053
=1.0432

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.

SGI=Sales_t / Sales_t-1
=Revenue_t / Revenue_t-1
=5589 / 4860.839
=1.1498

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))
=(358.71 / (358.71 + 742.8)) / (322 / (322 + 936))
=0.32565297 / 0.25596184
=1.2723

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)
=(2528 / 5589) / (2137.555 / 4860.839)
=0.45231705 / 0.43975022
=1.0286

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)
=((1500 + 3641) / 14159) / ((450 + 2978.9) / 11146.5)
=0.36309061 / 0.30762123
=1.1803

8. TATA = Total Accruals to Total Assets

Total accruals calculated as the change in working capital accounts other than cash less depreciation.

TATA=(IncomefromContinuingOperations_t - CashFlowsfromOperations_t) / TotalAssets_t
=(NetIncome_t - NonOperatingIncome_t - CashFlowsfromOperations_t) / TotalAssets_t
=(962 - 44 - 2483) / 14159
=-0.1105

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.

VMWare Inc has a M-score of -2.85 suggests that the company will not be a manipulator.


Related Terms

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


Historical Data

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.

VMWare Inc Annual Data

Dec04Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13
DSRI 0.83941.46880.81511.08931.06640.9375
GMI 0.99611.01950.9940.99080.990.9809
AQI 0.88770.96491.18140.93241.26040.8572
SGI 1.41881.0761.41181.31841.22241.1307
DEPI 0.99291.0670.67231.02121.07861.2208
SGAI 1.00481.05530.9580.96681.0070.9817
LVGI 0.83360.99380.95710.99720.97970.9435
TATA -0.1394-0.1578-0.1181-0.1554-0.1086-0.1281
M-score -2.90-2.72-2.78-2.86-2.61-3.04

VMWare Inc Quarterly Data

Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14
DSRI 0.94861.00231.01081.06640.98731.08081.00590.93770.94681.0343
GMI 0.98480.98630.98950.990.99160.98730.98390.98090.98240.9915
AQI 0.92520.82011.22811.26041.36071.29650.83390.85720.99531.0432
SGI 1.2971.26111.23421.22241.19161.16281.14731.13051.13381.1498
DEPI 1.06821.01930.99371.07861.11171.15911.2141.22081.26161.2723
SGAI 0.9620.97110.98421.0071.02311.02181.00550.98150.99221.0286
LVGI 0.96290.97710.94790.97971.00350.98470.9630.94351.13871.1803
TATA -0.1527-0.1361-0.1249-0.1105-0.1197-0.124-0.1299-0.1281-0.119-0.1105
M-score -2.99-2.95-2.74-2.62-2.73-2.71-2.99-3.04-2.99-2.85
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