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Western Digital Corp (NAS:WDC)
Beneish M-Score
-2.59 (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 -2.59 suggests that the company is not a manipulator.

WDC' s Beneish M-Score Range Over the Past 10 Years
Min: -3.79   Max: 1.42
Current: -2.59

-3.79
1.42

During the past 13 years, the highest Beneish M-Score of Western Digital Corp was 1.42. The lowest was -3.79. And the median was -2.73.


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 * 1.0695+0.528 * 1.0958+0.404 * 2.0975+0.892 * 0.8917+0.115 * 1.1021
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.5612+4.679 * -0.0508-0.327 * 1.766
=-2.59

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

This Year (Jun16) TTM:Last Year (Jun15) TTM:
Accounts Receivable was $1,461 Mil.
Revenue was 3495 + 2822 + 3317 + 3360 = $12,994 Mil.
Gross Profit was 821 + 753 + 906 + 955 = $3,435 Mil.
Total Current Assets was $12,584 Mil.
Total Assets was $32,862 Mil.
Property, Plant and Equipment(Net PPE) was $3,503 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,154 Mil.
Selling, General & Admin. Expense(SGA) was $1,342 Mil.
Total Current Liabilities was $6,949 Mil.
Long-Term Debt was $13,660 Mil.
Net Income was -366 + 74 + 251 + 283 = $242 Mil.
Non Operating Income was -73 + 0 + 0 + 0 = $-73 Mil.
Cash Flow from Operations was 355 + 485 + 598 + 545 = $1,983 Mil.
Accounts Receivable was $1,532 Mil.
Revenue was 3191 + 3550 + 3888 + 3943 = $14,572 Mil.
Gross Profit was 930 + 1032 + 1110 + 1149 = $4,221 Mil.
Total Current Assets was $8,513 Mil.
Total Assets was $15,170 Mil.
Property, Plant and Equipment(Net PPE) was $2,965 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,114 Mil.
Selling, General & Admin. Expense(SGA) was $964 Mil.
Total Current Liabilities was $3,238 Mil.
Long-Term Debt was $2,149 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)
=(1461 / 12994) / (1532 / 14572)
=0.11243651 / 0.10513313
=1.0695

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)
=(4221 / 14572) / (3435 / 12994)
=0.28966511 / 0.26435278
=1.0958

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 - (12584 + 3503) / 32862) / (1 - (8513 + 2965) / 15170)
=0.51046802 / 0.24337508
=2.0975

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
=12994 / 14572
=0.8917

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))
=(1114 / (1114 + 2965)) / (1154 / (1154 + 3503))
=0.27310615 / 0.24779901
=1.1021

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)
=(1342 / 12994) / (964 / 14572)
=0.10327844 / 0.06615427
=1.5612

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)
=((13660 + 6949) / 32862) / ((2149 + 3238) / 15170)
=0.62713773 / 0.35510877
=1.766

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
=(242 - -73 - 1983) / 32862
=-0.0508

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 -2.59 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

Jun07Jun08Jun09Jun10Jun11Jun12Jun13Jun14Jun15Jun16
DSRI 1.15040.98140.99321.02630.99281.49650.61651.12550.79971.0695
GMI 1.16020.76421.20060.73591.29650.64491.02580.98630.99481.0958
AQI 2.94372.16230.92330.67960.81824.20930.92431.1531.08212.0975
SGI 1.25961.47660.92311.32160.96711.30991.23020.98560.96310.8917
DEPI 1.0221.11270.85481.21510.8971.26320.67470.91161.0041.1021
SGAI 0.85610.83240.98980.99761.10031.61891.14721.09151.10231.5612
LVGI 0.921.0680.86690.86910.90391.47470.96330.97870.89381.766
TATA -0.0186-0.1091-0.1578-0.0764-0.1144-0.1024-0.1524-0.0775-0.0513-0.0508
M-score -1.27-2.22-3.19-2.73-2.97-1.35-3.41-2.70-2.89-2.59

Western Digital Corp Quarterly Data

Mar14Jun14Sep14Dec14Mar15Jun15Sep15Dec15Mar16Jun16
DSRI 1.14161.12551.05880.96490.95210.79970.92110.99320.87581.0695
GMI 1.01420.98630.97760.9951.00250.99481.00331.00871.0291.0958
AQI 1.18111.1531.12590.9791.03151.08211.10151.07650.9672.0975
SGI 0.92860.98561.00990.99460.98850.96310.91620.88360.84420.8917
DEPI 0.93910.91160.91640.93880.96061.0041.0281.03961.03541.1021
SGAI 0.94971.09151.25871.16821.18611.10231.07941.17641.37511.5612
LVGI 1.10460.97870.96210.89750.89920.89380.88350.93790.89551.766
TATA -0.1143-0.0775-0.0907-0.0614-0.0597-0.0513-0.0417-0.0762-0.0862-0.0508
M-score -2.90-2.70-2.84-2.82-2.80-2.89-2.75-2.92-3.16-2.59
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