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VMWare Inc (NYSE:VMW)
Beneish M-Score
-2.70 (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 -2.70 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: -2.7

-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 -2.81.


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 * 0.959+0.528 * 1.0123+0.404 * 0.9791+0.892 * 1.1016+0.115 * 1.1064
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0228+4.679 * -0.0593-0.327 * 0.9966
=-2.70

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

This Year (Sep15) TTM:Last Year (Sep14) TTM:
Accounts Receivable was $1,011 Mil.
Revenue was 1672 + 1521 + 1511 + 1702 = $6,406 Mil.
Gross Profit was 1414 + 1271 + 1268 + 1447 = $5,400 Mil.
Total Current Assets was $8,662 Mil.
Total Assets was $14,791 Mil.
Property, Plant and Equipment(Net PPE) was $1,124 Mil.
Depreciation, Depletion and Amortization(DDA) was $336 Mil.
Selling, General & Admin. Expense(SGA) was $3,013 Mil.
Total Current Liabilities was $3,750 Mil.
Long-Term Debt was $1,500 Mil.
Net Income was 256 + 172 + 196 + 326 = $950 Mil.
Non Operating Income was -7 + 1 + -2 + 9 = $1 Mil.
Cash Flow from Operations was 412 + 316 + 683 + 415 = $1,826 Mil.
Accounts Receivable was $957 Mil.
Revenue was 1515 + 1457 + 1360 + 1483 = $5,815 Mil.
Gross Profit was 1273 + 1239 + 1159 + 1291 = $4,962 Mil.
Total Current Assets was $8,532 Mil.
Total Assets was $14,519 Mil.
Property, Plant and Equipment(Net PPE) was $969 Mil.
Depreciation, Depletion and Amortization(DDA) was $331 Mil.
Selling, General & Admin. Expense(SGA) was $2,674 Mil.
Total Current Liabilities was $3,671 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)
=(1011 / 6406) / (957 / 5815)
=0.15782079 / 0.16457438
=0.959

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)
=(1271 / 5815) / (1414 / 6406)
=0.8533104 / 0.84295973
=1.0123

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 - (8662 + 1124) / 14791) / (1 - (8532 + 969) / 14519)
=0.33838145 / 0.34561609
=0.9791

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
=6406 / 5815
=1.1016

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))
=(331 / (331 + 969)) / (336 / (336 + 1124))
=0.25461538 / 0.23013699
=1.1064

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)
=(3013 / 6406) / (2674 / 5815)
=0.47034031 / 0.45984523
=1.0228

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 + 3750) / 14791) / ((1500 + 3671) / 14519)
=0.35494558 / 0.35615401
=0.9966

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
=(950 - 1 - 1826) / 14791
=-0.0593

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 -2.70 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 0.77790.83941.46880.81511.08931.06650.93741.0750.9867
GMI 0.98760.99611.01950.9940.99080.98990.9811.01391.0035
AQI 0.51360.88771.08931.04640.93241.26020.85731.07661.0059
SGI 1.88351.41881.0761.41181.31841.22241.13071.1591.0888
DEPI 2.11570.99290.83240.86171.02121.07871.22071.14041.0918
SGAI 1.01011.00481.05530.9580.96681.00720.98151.09530.9822
LVGI 0.37260.83360.99380.95710.99720.97110.95191.18960.9897
TATA -0.124-0.1394-0.1578-0.1181-0.1554-0.1111-0.1257-0.0855-0.0568
M-score -2.35-2.90-2.70-2.81-2.86-2.62-3.03-2.69-2.66

VMWare Inc Quarterly Data

Sep13Dec13Mar14Jun14Sep14Dec14Mar15Jun15Sep15Dec15
DSRI 1.0060.93760.94681.03441.04631.07491.03450.97030.9590.9864
GMI 0.98380.98120.98270.99171.00161.01371.01841.01941.01231.0035
AQI 0.83390.85730.99531.04321.05961.07660.93020.94710.97911.0059
SGI 1.14721.13051.13371.14981.15931.1591.15071.11811.10161.0892
DEPI 1.21371.21881.261.27061.21211.14041.11921.09311.10641.0893
SGAI 1.00540.98080.99161.02791.05521.0951.08751.04511.02280.9833
LVGI 0.9630.95191.13871.18031.22841.18961.01931.01150.99660.9897
TATA -0.1327-0.1245-0.1158-0.1074-0.1056-0.0855-0.0834-0.0766-0.0593-0.0569
M-score -3.00-3.03-2.98-2.84-2.82-2.69-2.73-2.77-2.70-2.66
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