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VMware Inc (NYSE:VMW)
Beneish M-Score
-2.80 (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 -2.80 suggests that the company is not a manipulator.

VMW' s Beneish M-Score Range Over the Past 10 Years
Min: -3.46   Max: -2.4
Current: -2.8

-3.46
-2.4

During the past 12 years, the highest Beneish M-Score of VMware Inc was -2.40. The lowest was -3.46. And the median was -2.79.


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 * 0.9168+0.528 * 0.9924+0.404 * 0.9439+0.892 * 1.0917+0.115 * 0.952
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9458+4.679 * -0.0689-0.327 * 0.9293
=-2.80

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

This Year (Jun16) TTM:Last Year (Jun15) TTM:
Accounts Receivable was $1,215 Mil.
Revenue was 1693 + 1589 + 1868 + 1672 = $6,822 Mil.
Gross Profit was 1432 + 1338 + 1601 + 1414 = $5,785 Mil.
Total Current Assets was $10,143 Mil.
Total Assets was $16,484 Mil.
Property, Plant and Equipment(Net PPE) was $1,073 Mil.
Depreciation, Depletion and Amortization(DDA) was $350 Mil.
Selling, General & Admin. Expense(SGA) was $3,050 Mil.
Total Current Liabilities was $4,126 Mil.
Long-Term Debt was $1,500 Mil.
Net Income was 265 + 161 + 374 + 256 = $1,056 Mil.
Non Operating Income was 2 + -1 + 1 + -7 = $-5 Mil.
Cash Flow from Operations was 577 + 720 + 488 + 412 = $2,197 Mil.
Accounts Receivable was $1,214 Mil.
Revenue was 1521 + 1511 + 1702 + 1515 = $6,249 Mil.
Gross Profit was 1271 + 1268 + 1447 + 1273 = $5,259 Mil.
Total Current Assets was $8,712 Mil.
Total Assets was $14,853 Mil.
Property, Plant and Equipment(Net PPE) was $1,112 Mil.
Depreciation, Depletion and Amortization(DDA) was $340 Mil.
Selling, General & Admin. Expense(SGA) was $2,954 Mil.
Total Current Liabilities was $3,955 Mil.
Long-Term Debt was $1,500 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)
=(1215 / 6822) / (1214 / 6249)
=0.17810026 / 0.19427108
=0.9168

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)
=(5259 / 6249) / (5785 / 6822)
=0.84157465 / 0.84799179
=0.9924

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 - (10143 + 1073) / 16484) / (1 - (8712 + 1112) / 14853)
=0.31958263 / 0.3385848
=0.9439

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
=6822 / 6249
=1.0917

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))
=(340 / (340 + 1112)) / (350 / (350 + 1073))
=0.23415978 / 0.24595924
=0.952

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)
=(3050 / 6822) / (2954 / 6249)
=0.44708297 / 0.47271563
=0.9458

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 + 4126) / 16484) / ((1500 + 3955) / 14853)
=0.34130066 / 0.36726587
=0.9293

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
=(1056 - -5 - 2197) / 16484
=-0.0689

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 -2.80 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

Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15
DSRI 0.77790.83941.46880.81511.08941.06650.93741.0750.9867
GMI 0.98760.99611.01950.9940.99080.98990.9811.01391.0035
AQI 0.51360.88771.08931.04640.93241.26020.85731.12940.9589
SGI 1.88351.41881.0761.41181.31841.22251.13071.1591.0888
DEPI 2.11570.99290.83240.86171.02091.0791.22071.14041.0918
SGAI 1.01011.00481.05530.9580.96691.00710.98151.09530.9822
LVGI 0.37260.83360.99380.95710.99720.97110.95191.18960.9897
TATA -0.124-0.1394-0.1578-0.1181-0.1572-0.1085-0.1257-0.0855-0.0568
M-score -2.35-2.90-2.70-2.81-2.87-2.61-3.03-2.67-2.68

VMware Inc Quarterly Data

Mar14Jun14Sep14Dec14Mar15Jun15Sep15Dec15Mar16Jun16
DSRI 0.94681.03441.04631.07491.03450.97030.9590.98641.02520.9168
GMI 0.98270.99171.00161.01371.01841.01941.01231.00370.99930.9924
AQI 0.99531.04321.05961.12940.93020.94710.97910.95890.97040.9439
SGI 1.13371.14981.15931.1591.15071.11811.10161.08921.07521.0917
DEPI 1.261.27061.21211.14041.11921.09311.10641.09181.01450.952
SGAI 0.99161.02791.05521.0951.08751.04511.02280.98290.96690.9458
LVGI 1.13871.18031.22841.18961.01931.01150.99660.98970.9590.9293
TATA -0.1158-0.1074-0.1056-0.0855-0.0834-0.0766-0.0593-0.0568-0.0611-0.0689
M-score -2.98-2.84-2.82-2.67-2.73-2.77-2.70-2.68-2.67-2.80
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