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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.
VMWare Inc has a M-score of -2.85 suggests that the company is not a manipulator.
During the past 10 years, the highest Beneish M-Score of VMWare Inc was -2.39. The lowest was -3.57. And the median was -2.87.
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|
|This Year (Jun14) TTM:||Last Year (Jun13) TTM:|
|Accounts Receivable was $1,159 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 $975 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
A large increase in DSR could be indicative of revenue inflation.
|DSRI||=||(Receivables_t / Revenue_t)||/||(Receivables_t-1 / Revenue_t-1)|
|=||(1159 / 5589)||/||(974.6 / 4860.839)|
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)|
|=||(1159 / 4860.839)||/||(1239 / 5589)|
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 - (8161 + 936) / 14159)||/||(1 - (6583.9 + 742.8) / 11146.5)|
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))|
|=||(358.71 / (358.71 + 742.8))||/||(322 / (322 + 936))|
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)|
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)|
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|
|=||(962 - 44||-||2483)||/||14159|
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.
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