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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 12 years, the highest Beneish M-Score of VMware Inc was -2.40. The lowest was -3.46. And the median was -2.77.
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 * 1.0252||+||0.528 * 0.9993||+||0.404 * 0.9704||+||0.892 * 1.0752||+||0.115 * 1.0145|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9669||+||4.679 * -0.0611||-||0.327 * 0.959|
|This Year (Mar16) TTM:||Last Year (Mar15) TTM:|
|Accounts Receivable was $1,089 Mil.|
Revenue was 1589 + 1868 + 1672 + 1521 = $6,650 Mil.
Gross Profit was 1338 + 1601 + 1414 + 1271 = $5,624 Mil.
Total Current Assets was $9,494 Mil.
Total Assets was $15,836 Mil.
Property, Plant and Equipment(Net PPE) was $1,108 Mil.
Depreciation, Depletion and Amortization(DDA) was $347 Mil.
Selling, General & Admin. Expense(SGA) was $3,048 Mil.
Total Current Liabilities was $3,909 Mil.
Long-Term Debt was $1,500 Mil.
Net Income was 161 + 374 + 256 + 172 = $963 Mil.
Non Operating Income was -1 + 1 + -7 + 1 = $-6 Mil.
Cash Flow from Operations was 720 + 488 + 412 + 316 = $1,936 Mil.
|Accounts Receivable was $988 Mil.
Revenue was 1511 + 1702 + 1515 + 1457 = $6,185 Mil.
Gross Profit was 1268 + 1447 + 1273 + 1239 = $5,227 Mil.
Total Current Assets was $8,705 Mil.
Total Assets was $14,807 Mil.
Property, Plant and Equipment(Net PPE) was $1,059 Mil.
Depreciation, Depletion and Amortization(DDA) was $338 Mil.
Selling, General & Admin. Expense(SGA) was $2,932 Mil.
Total Current Liabilities was $3,774 Mil.
Long-Term Debt was $1,500 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)|
|=||(1089 / 6650)||/||(988 / 6185)|
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)|
|=||(1601 / 6185)||/||(1338 / 6650)|
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 - (9494 + 1108) / 15836)||/||(1 - (8705 + 1059) / 14807)|
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))|
|=||(338 / (338 + 1059))||/||(347 / (347 + 1108))|
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)|
|=||(3048 / 6650)||/||(2932 / 6185)|
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 + 3909) / 15836)||/||((1500 + 3774) / 14807)|
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|
|=||(963 - -6||-||1936)||/||15836|
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 -2.67 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
VMware Inc Annual Data
VMware Inc Quarterly Data