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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.
Western Digital Corp has a M-score of -2.88 suggests that the company is not a manipulator.
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.
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 * -0.1143||-||0.327 * 1.1046|
|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 697 + 727 + 680 + 684 = $2,788 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
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)|
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)|
|=||(1141 / 16377)||/||(1060 / 15207)|
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 - (8306 + 3406) / 15332)||/||(1 - (7340 + 3803) / 13927)|
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))|
|=||(1270 / (1270 + 3803))||/||(1238 / (1238 + 3406))|
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)|
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)|
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|
|=||(1035 - 0||-||2788)||/||15332|
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.
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
Western Digital Corp Annual Data
Western Digital Corp Quarterly Data