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Western Digital Corp (NAS:WDC)
Beneish M-Score
-2.69 (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 -2.69 suggests that the company is not a manipulator.

WDC' s 10-Year Beneish M-Score Range
Min: -16.6   Max: 14.19
Current: -2.69

-16.6
14.19

During the past 13 years, the highest Beneish M-Score of Western Digital Corp was 14.19. The lowest was -16.60. And the median was -2.69.


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 * 1.1255+0.528 * 0.9863+0.404 * 1.153+0.892 * 0.9856+0.115 * 0.9116
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.029+4.679 * -0.0774-0.327 * 0.9787
=-2.69

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

This Year (Jun14) TTM:Last Year (Jun13) TTM:
Accounts Receivable was $1,989 Mil.
Revenue was 3651 + 3703 + 3972 + 3804 = $15,130 Mil.
Gross Profit was 1071 + 1060 + 1141 + 1088 = $4,360 Mil.
Total Current Assets was $8,720 Mil.
Total Assets was $15,499 Mil.
Property, Plant and Equipment(Net PPE) was $3,293 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,244 Mil.
Selling, General & Admin. Expense(SGA) was $856 Mil.
Total Current Liabilities was $3,845 Mil.
Long-Term Debt was $2,313 Mil.
Net Income was 317 + 375 + 430 + 495 = $1,617 Mil.
Non Operating Income was 0 + 0 + 0 + 0 = $0 Mil.
Cash Flow from Operations was 712 + 698 + 726 + 680 = $2,816 Mil.
Accounts Receivable was $1,793 Mil.
Revenue was 3728 + 3764 + 3824 + 4035 = $15,351 Mil.
Gross Profit was 1050 + 1061 + 1059 + 1193 = $4,363 Mil.
Total Current Assets was $7,598 Mil.
Total Assets was $14,036 Mil.
Property, Plant and Equipment(Net PPE) was $3,700 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,233 Mil.
Selling, General & Admin. Expense(SGA) was $844 Mil.
Total Current Liabilities was $3,973 Mil.
Long-Term Debt was $1,725 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)
=(1989 / 15130) / (1793 / 15351)
=0.13146067 / 0.11680021
=1.1255

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)
=(1060 / 15351) / (1071 / 15130)
=0.28421601 / 0.2881692
=0.9863

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 - (8720 + 3293) / 15499) / (1 - (7598 + 3700) / 14036)
=0.22491774 / 0.19506982
=1.153

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
=15130 / 15351
=0.9856

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))
=(1233 / (1233 + 3700)) / (1244 / (1244 + 3293))
=0.24994932 / 0.27418999
=0.9116

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)
=(856 / 15130) / (844 / 15351)
=0.05657634 / 0.05498013
=1.029

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)
=((2313 + 3845) / 15499) / ((1725 + 3973) / 14036)
=0.39731596 / 0.40595611
=0.9787

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
=(1617 - 0 - 2816) / 15499
=-0.0774

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 -2.69 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 1.07741.00171.14930.98140.99321.02630.99281.49650.61651.1255
GMI 0.93470.8491.15990.76421.20060.73591.29650.64491.02580.9863
AQI 0.33272.00822.88072.16230.92330.67960.81824.20930.92431.153
SGI 1.19431.19311.25951.47660.92311.32160.96711.30991.23020.9856
DEPI 1.06191.12791.02151.11270.85481.21510.8971.26320.67470.9116
SGAI 1.2230.89950.85770.83240.98980.99761.19791.28811.32441.029
LVGI 0.9710.79080.92751.0680.86690.86910.90391.47470.96330.9787
TATA -0.1685-0.0109-0.0283-0.104-0.1578-0.0764-0.1144-0.1024-0.1524-0.0774
M-score -3.35-1.93-1.35-2.19-3.19-2.73-2.98-1.29-3.44-2.69

Western Digital Corp Quarterly Data

Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14
DSRI 1.90521.49651.02281.38450.44220.61650.8391.15921.14161.1255
GMI 0.75090.64490.62140.73670.89051.02581.10241.05691.0240.9863
AQI 3.57784.20935.32484.96331.00230.92430.94041.1281.18111.153
SGI 1.06541.30991.40671.67471.61721.23021.09410.97570.92860.9856
DEPI 1.56231.26321.10560.98590.52850.67470.77370.8650.93910.9116
SGAI 1.47351.28811.33741.20571.14861.32441.11151.10230.96981.029
LVGI 1.61161.47471.36171.80740.7970.96331.04311.09921.10460.9787
TATA -0.0937-0.1024-0.1241-0.1409-0.113-0.1524-0.1288-0.1156-0.1143-0.0774
M-score -1.33-1.29-1.29-1.02-3.04-3.44-3.18-2.88-2.90-2.69
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