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VMWare Inc (NYSE:VMW)
Beneish M-Score
-2.69 (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 -2.69 suggests that the company is not a manipulator.

VMW' s 10-Year Beneish M-Score Range
Min: -3.03   Max: -2.62
Current: -2.69

-3.03
-2.62

During the past 11 years, the highest Beneish M-Score of VMWare Inc was -2.62. The lowest was -3.03. And the median was -2.81.


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 * 1.0749+0.528 * 1.0137+0.404 * 1.0766+0.892 * 1.159+0.115 * 1.1404
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.095+4.679 * -0.0844-0.327 * 1.1896
=-2.69

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

This Year (Dec14) TTM:Last Year (Dec13) TTM:
Accounts Receivable was $1,520 Mil.
Revenue was 1702 + 1515 + 1457 + 1360 = $6,034 Mil.
Gross Profit was 1447 + 1273 + 1239 + 1159 = $5,118 Mil.
Total Current Assets was $9,130 Mil.
Total Assets was $15,216 Mil.
Property, Plant and Equipment(Net PPE) was $1,035 Mil.
Depreciation, Depletion and Amortization(DDA) was $345 Mil.
Selling, General & Admin. Expense(SGA) was $2,834 Mil.
Total Current Liabilities was $3,996 Mil.
Long-Term Debt was $1,500 Mil.
Net Income was 326 + 194 + 167 + 199 = $886 Mil.
Non Operating Income was -19 + 9 + 0 + 0 = $-10 Mil.
Cash Flow from Operations was 415 + 606 + 409 + 750 = $2,180 Mil.
Accounts Receivable was $1,220 Mil.
Revenue was 1483 + 1289 + 1243 + 1191 = $5,206 Mil.
Gross Profit was 1291 + 1106 + 1070 + 1009 = $4,476 Mil.
Total Current Assets was $7,681 Mil.
Total Assets was $12,327 Mil.
Property, Plant and Equipment(Net PPE) was $845 Mil.
Depreciation, Depletion and Amortization(DDA) was $337 Mil.
Selling, General & Admin. Expense(SGA) was $2,233 Mil.
Total Current Liabilities was $3,293 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)
=(1520 / 6034) / (1220 / 5206)
=0.25190587 / 0.23434499
=1.0749

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)
=(1273 / 5206) / (1447 / 6034)
=0.85977718 / 0.84819357
=1.0137

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 - (9130 + 1035) / 15216) / (1 - (7681 + 845) / 12327)
=0.33195321 / 0.30834753
=1.0766

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
=6034 / 5206
=1.159

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))
=(337 / (337 + 845)) / (345 / (345 + 1035))
=0.28510998 / 0.25
=1.1404

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)
=(2834 / 6034) / (2233 / 5206)
=0.46967186 / 0.42892816
=1.095

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 + 3996) / 15216) / ((450 + 3293) / 12327)
=0.36119874 / 0.30364241
=1.1896

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
=(886 - -10 - 2180) / 15216
=-0.0844

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 -2.69 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

Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14
DSRI 0.83941.46880.81511.08931.06650.93741.075
GMI 0.99611.01950.9940.99080.98990.9811.0139
AQI 0.88771.08931.04640.93241.26020.85731.0766
SGI 1.41881.0761.41181.31841.22241.13071.159
DEPI 0.99290.83240.86171.02121.07871.22071.1404
SGAI 1.00481.05530.9580.96681.00720.98151.0953
LVGI 0.83360.99380.95710.99720.97110.95191.1896
TATA -0.1394-0.1578-0.1181-0.1554-0.1111-0.1257-0.0855
M-score -2.90-2.70-2.81-2.86-2.62-3.03-2.69

VMWare Inc Quarterly Data

Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14Dec14
DSRI 1.01071.06650.98721.08071.0060.93760.94681.03441.04631.0749
GMI 0.98940.98970.99130.9870.98380.98120.98270.99171.00161.0137
AQI 1.22811.26021.36071.29650.83390.85730.99531.04321.05961.0766
SGI 1.23431.22251.19161.16281.14721.13051.13371.14981.15931.159
DEPI 0.99451.08041.11321.16071.21371.21881.261.27061.21211.1404
SGAI 0.98461.00771.02381.02251.00540.98080.99161.02791.05521.095
LVGI 0.94790.97111.00350.98470.9630.95191.13871.18031.22841.1896
TATA -0.1227-0.1109-0.1206-0.1255-0.1327-0.1245-0.1158-0.1074-0.1063-0.0844
M-score -2.73-2.62-2.74-2.72-3.00-3.03-2.98-2.84-2.83-2.69
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