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Western Digital Corp (NAS:WDC)
Beneish M-Score
-2.79 (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 -2.79 suggests that the company is not a manipulator.

WDC' s 10-Year Beneish M-Score Range
Min: -16.56   Max: 14.28
Current: -2.79

-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 * 0.9521+0.528 * 1.0025+0.404 * 1.0315+0.892 * 0.9885+0.115 * 0.9606
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.1208+4.679 * -0.0596-0.327 * 0.8992
=-2.79

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

This Year (Mar15) TTM:Last Year (Mar14) TTM:
Accounts Receivable was $1,696 Mil.
Revenue was 3550 + 3888 + 3943 + 3651 = $15,032 Mil.
Gross Profit was 1032 + 1110 + 1149 + 1029 = $4,320 Mil.
Total Current Assets was $8,429 Mil.
Total Assets was $15,176 Mil.
Property, Plant and Equipment(Net PPE) was $3,051 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,172 Mil.
Selling, General & Admin. Expense(SGA) was $893 Mil.
Total Current Liabilities was $3,218 Mil.
Long-Term Debt was $2,203 Mil.
Net Income was 384 + 438 + 423 + 317 = $1,562 Mil.
Non Operating Income was 0 + 0 + 0 + 0 = $0 Mil.
Cash Flow from Operations was 684 + 243 + 827 + 712 = $2,466 Mil.
Accounts Receivable was $1,802 Mil.
Revenue was 3703 + 3972 + 3804 + 3728 = $15,207 Mil.
Gross Profit was 1076 + 1156 + 1099 + 1050 = $4,381 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 $806 Mil.
Total Current Liabilities was $3,747 Mil.
Long-Term Debt was $2,344 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)
=(1696 / 15032) / (1802 / 15207)
=0.11282597 / 0.11849806
=0.9521

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)
=(1110 / 15207) / (1032 / 15032)
=0.28809101 / 0.28738691
=1.0025

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 - (8429 + 3051) / 15176) / (1 - (8306 + 3406) / 15332)
=0.24354244 / 0.23610749
=1.0315

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
=15032 / 15207
=0.9885

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))
=(1238 / (1238 + 3406)) / (1172 / (1172 + 3051))
=0.26658053 / 0.27752782
=0.9606

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)
=(893 / 15032) / (806 / 15207)
=0.0594066 / 0.05300191
=1.1208

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)
=((2203 + 3218) / 15176) / ((2344 + 3747) / 15332)
=0.35720875 / 0.39727368
=0.8992

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
=(1562 - 0 - 2466) / 15176
=-0.0596

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 -2.79 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

Jun05Jun06Jun07Jun08Jun09Jun10Jun11Jun12Jun13Jun14
DSRI 1.07741.00071.15040.98140.99321.02630.99281.49650.61651.1255
GMI 0.93460.84851.16020.76421.20060.73591.29650.64491.02580.9863
AQI 0.33271.96532.94372.16230.92330.67960.81824.20930.92431.153
SGI 1.19431.1931.25961.47660.92311.32160.96711.30991.23020.9856
DEPI 1.07471.10361.0221.11270.85481.21510.8971.26320.67470.9116
SGAI 1.2240.89710.85610.83240.98980.99761.10031.61891.14721.029
LVGI 0.9730.79560.921.0680.86690.86910.90391.47470.96330.9787
TATA -0.170.0053-0.0283-0.1091-0.1578-0.0764-0.1144-0.1024-0.1524-0.0774
M-score -3.36-1.88-1.32-2.22-3.19-2.73-2.97-1.35-3.41-2.69

Western Digital Corp Quarterly Data

Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14Dec14Mar15
DSRI 1.38450.44220.61650.8391.15921.14161.12551.05880.96490.9521
GMI 0.73670.89051.02581.09951.05061.01420.98630.97760.9951.0025
AQI 4.96331.00230.92430.94041.1281.18111.1531.12590.9791.0315
SGI 1.67471.61721.23021.09410.97570.92860.98561.00990.99460.9885
DEPI 0.98590.52850.67470.77370.8650.93910.91160.91640.93880.9606
SGAI 1.43351.3331.14721.0011.03360.94971.0291.19281.1051.1208
LVGI 1.80740.7970.96331.04311.09921.10460.97870.96210.89750.8992
TATA -0.1409-0.113-0.1524-0.1288-0.1156-0.1143-0.0774-0.0906-0.0612-0.0596
M-score -1.06-3.07-3.41-3.16-2.87-2.90-2.69-2.83-2.81-2.79
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