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Western Digital Corp (NAS:WDC)
Beneish M-Score
-2.88 (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.

Western Digital Corp has a M-score of -2.88 suggests that the company is not a manipulator.

WDC' s 10-Year Beneish M-Score Range
Min: -16.56   Max: 14.28
Current: -2.88

-16.56
14.28

During the past 13 years, the highest Beneish M-Score of Western Digital Corp was 14.28. The lowest was -16.56. And the median was -2.80.


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 Western Digital Corp 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 * 1.1416+0.528 * 1.024+0.404 * 1.1811+0.892 * 0.9286+0.115 * 0.9391
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.8849+4.679 * -0.1144-0.327 * 1.1046
=-2.88

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

This Year (Mar14) TTM:Last Year (Mar13) TTM:
Accounts Receivable was $1,802 Mil.
Revenue was 3703 + 3972 + 3804 + 3728 = $15,207 Mil.
Gross Profit was 1060 + 1141 + 1088 + 1050 = $4,339 Mil.
Total Current Assets was $8,306 Mil.
Total Assets was $15,332 Mil.
Property, Plant and Equipment(Net PPE) was $3,406 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,238 Mil.
Selling, General & Admin. Expense(SGA) was $751 Mil.
Total Current Liabilities was $3,747 Mil.
Long-Term Debt was $2,344 Mil.
Net Income was 375 + 430 + 495 + -265 = $1,035 Mil.
Non Operating Income was 0 + 0 + 0 + 0 = $0 Mil.
Cash Flow from Operations was 698 + 727 + 680 + 684 = $2,789 Mil.
Accounts Receivable was $1,700 Mil.
Revenue was 3764 + 3824 + 4035 + 4754 = $16,377 Mil.
Gross Profit was 1061 + 1059 + 1193 + 1472 = $4,785 Mil.
Total Current Assets was $7,340 Mil.
Total Assets was $13,927 Mil.
Property, Plant and Equipment(Net PPE) was $3,803 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,270 Mil.
Selling, General & Admin. Expense(SGA) was $914 Mil.
Total Current Liabilities was $3,226 Mil.
Long-Term Debt was $1,783 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)
=(1802 / 15207) / (1700 / 16377)
=0.11849806 / 0.10380412
=1.1416

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)
=(1141 / 16377) / (1060 / 15207)
=0.29217805 / 0.28532912
=1.024

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 - (8306 + 3406) / 15332) / (1 - (7340 + 3803) / 13927)
=0.23610749 / 0.19989948
=1.1811

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
=15207 / 16377
=0.9286

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))
=(1270 / (1270 + 3803)) / (1238 / (1238 + 3406))
=0.25034496 / 0.26658053
=0.9391

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)
=(751 / 15207) / (914 / 16377)
=0.04938515 / 0.05580998
=0.8849

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)
=((2344 + 3747) / 15332) / ((1783 + 3226) / 13927)
=0.39727368 / 0.35966109
=1.1046

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
=(1035 - 0 - 2789) / 15332
=-0.1144

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.

Western Digital Corp has a M-score of -2.88 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.

Western Digital Corp Annual Data

Jun04Jun05Jun06Jun07Jun08Jun09Jun10Jun11Jun12Jun13
DSRI 1.07741.00071.15040.98140.99321.02630.99281.49650.6165
GMI 0.93460.84851.16020.76421.20060.73591.29650.64491.0258
AQI 0.33271.96532.94372.16230.92330.67960.81824.20930.9243
SGI 1.19431.1931.25961.47660.92311.32160.96711.30991.2302
DEPI 1.07471.10361.0221.11270.85481.21510.8971.26320.6747
SGAI 1.2240.89710.85610.83240.98980.99761.10031.61891.1472
LVGI 0.9730.79560.921.0680.86690.86910.90391.47470.9633
TATA -0.170.0053-0.0283-0.1091-0.1578-0.0764-0.1144-0.1024-0.1524
M-score -3.36-1.88-1.32-2.22-3.19-2.73-2.97-1.35-3.41

Western Digital Corp Quarterly Data

Dec11Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14
DSRI 0.63281.90521.49651.02281.38450.44220.61650.8391.15921.1416
GMI 0.96450.75090.64490.62140.73670.89051.02581.10241.05691.024
AQI 0.71633.57784.20935.32484.96331.00230.92430.94041.1281.1811
SGI 0.94441.06541.30991.40671.67471.61721.23021.09410.97570.9286
DEPI 0.89151.56231.26321.10560.98590.52850.67470.77370.8650.9391
SGAI 1.30731.39151.61891.62691.43351.3331.14720.98690.99490.8849
LVGI 0.67761.61161.47471.36171.80740.7970.96331.04311.09921.1046
TATA -0.1027-0.0937-0.1024-0.1241-0.1409-0.113-0.1524-0.1288-0.1156-0.1144
M-score -3.44-1.32-1.35-1.34-1.06-3.07-3.41-3.15-2.86-2.88
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