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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 * 1.0531||+||0.528 * 0.9923||+||0.404 * 0.9463||+||0.892 * 1.0793||+||0.115 * 0.9252|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9308||+||4.679 * -0.0708||-||0.327 * 1.0175|
|This Year (Dec16) TTM:||Last Year (Dec15) TTM:|
|Accounts Receivable was $1,856 Mil.|
Revenue was 2033 + 1778 + 1693 + 1589 = $7,093 Mil.
Gross Profit was 1759 + 1512 + 1432 + 1338 = $6,041 Mil.
Total Current Assets was $10,335 Mil.
Total Assets was $16,643 Mil.
Property, Plant and Equipment(Net PPE) was $1,049 Mil.
Depreciation, Depletion and Amortization(DDA) was $345 Mil.
Selling, General & Admin. Expense(SGA) was $3,048 Mil.
Total Current Liabilities was $4,554 Mil.
Long-Term Debt was $1,500 Mil.
Net Income was 441 + 319 + 265 + 161 = $1,186 Mil.
Non Operating Income was -9 + -8 + 2 + -1 = $-16 Mil.
Cash Flow from Operations was 464 + 620 + 577 + 720 = $2,381 Mil.
|Accounts Receivable was $1,633 Mil.
Revenue was 1868 + 1672 + 1521 + 1511 = $6,572 Mil.
Gross Profit was 1601 + 1414 + 1271 + 1268 = $5,554 Mil.
Total Current Assets was $9,360 Mil.
Total Assets was $15,746 Mil.
Property, Plant and Equipment(Net PPE) was $1,128 Mil.
Depreciation, Depletion and Amortization(DDA) was $335 Mil.
Selling, General & Admin. Expense(SGA) was $3,034 Mil.
Total Current Liabilities was $4,129 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)|
|=||(1856 / 7093)||/||(1633 / 6572)|
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)|
|=||(5554 / 6572)||/||(6041 / 7093)|
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 - (10335 + 1049) / 16643)||/||(1 - (9360 + 1128) / 15746)|
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))|
|=||(335 / (335 + 1128))||/||(345 / (345 + 1049))|
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 / 7093)||/||(3034 / 6572)|
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 + 4554) / 16643)||/||((1500 + 4129) / 15746)|
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|
|=||(1186 - -16||-||2381)||/||16643|
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 -2.72 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