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Western Digital Corp (NAS:WDC)
Beneish M-Score
-2.84 (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 -2.84 suggests that the company is not a manipulator.

WDC' s 10-Year Beneish M-Score Range
Min: -16.56   Max: 14.28
Current: -2.84

-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 * 1.0588+0.528 * 0.9751+0.404 * 1.1259+0.892 * 1.0099+0.115 * 0.9164
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.2068+4.679 * -0.0906-0.327 * 0.9621
=-2.84

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

This Year (Sep14) TTM:Last Year (Sep13) TTM:
Accounts Receivable was $1,915 Mil.
Revenue was 3943 + 3651 + 3703 + 3972 = $15,269 Mil.
Gross Profit was 1149 + 1071 + 1060 + 1141 = $4,421 Mil.
Total Current Assets was $8,990 Mil.
Total Assets was $15,652 Mil.
Property, Plant and Equipment(Net PPE) was $3,202 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,221 Mil.
Selling, General & Admin. Expense(SGA) was $953 Mil.
Total Current Liabilities was $3,918 Mil.
Long-Term Debt was $2,281 Mil.
Net Income was 423 + 317 + 375 + 430 = $1,545 Mil.
Non Operating Income was 0 + 0 + 0 + 0 = $0 Mil.
Cash Flow from Operations was 827 + 712 + 698 + 726 = $2,963 Mil.
Accounts Receivable was $1,791 Mil.
Revenue was 3804 + 3728 + 3764 + 3824 = $15,120 Mil.
Gross Profit was 1099 + 1050 + 1061 + 1059 = $4,269 Mil.
Total Current Assets was $8,261 Mil.
Total Assets was $14,806 Mil.
Property, Plant and Equipment(Net PPE) was $3,638 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,232 Mil.
Selling, General & Admin. Expense(SGA) was $782 Mil.
Total Current Liabilities was $4,427 Mil.
Long-Term Debt was $1,668 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)
=(1915 / 15269) / (1791 / 15120)
=0.12541751 / 0.11845238
=1.0588

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)
=(1071 / 15120) / (1149 / 15269)
=0.28234127 / 0.2895409
=0.9751

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 - (8990 + 3202) / 15652) / (1 - (8261 + 3638) / 14806)
=0.22105801 / 0.19633932
=1.1259

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
=15269 / 15120
=1.0099

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))
=(1232 / (1232 + 3638)) / (1221 / (1221 + 3202))
=0.25297741 / 0.27605697
=0.9164

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)
=(953 / 15269) / (782 / 15120)
=0.06241404 / 0.05171958
=1.2068

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)
=((2281 + 3918) / 15652) / ((1668 + 4427) / 14806)
=0.39605162 / 0.41165744
=0.9621

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
=(1545 - 0 - 2963) / 15652
=-0.0906

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 -2.84 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

Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14
DSRI 1.49651.02281.38450.44220.61650.8391.15921.14161.12551.0588
GMI 0.64490.62140.73670.89051.02581.09951.05421.02140.98380.9751
AQI 4.20935.32484.96331.00230.92430.94041.1281.18111.1531.1259
SGI 1.30991.40671.67471.61721.23021.09410.97570.92860.98561.0099
DEPI 1.26321.10560.98590.52850.67470.77370.8650.93910.91160.9164
SGAI 1.61891.62691.43351.3331.14721.0011.00870.89781.04231.2068
LVGI 1.47471.36171.80740.7970.96331.04311.09921.10460.97870.9621
TATA -0.1024-0.1241-0.1409-0.113-0.1524-0.1288-0.1156-0.1143-0.0774-0.0906
M-score -1.35-1.34-1.06-3.07-3.41-3.16-2.87-2.89-2.70-2.84
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