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Western Digital Corp (NAS:WDC)
Beneish M-Score
-2.80 (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 -2.80 suggests that the company is not a manipulator.

WDC' s Beneish M-Score Range Over the Past 10 Years
Min: -16.56   Max: 14.28
Current: -2.8

-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 * 0.9079+0.528 * 1.0146+0.404 * 1.1015+0.892 * 0.9294+0.115 * 1.028
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0301+4.679 * -0.056-0.327 * 0.8835
=-2.80

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

This Year (Sep15) TTM:Last Year (Sep14) TTM:
Accounts Receivable was $1,616 Mil.
Revenue was 3360 + 0 + 3550 + 3888 = $10,798 Mil.
Gross Profit was 955 + 0 + 1032 + 1110 = $3,097 Mil.
Total Current Assets was $8,655 Mil.
Total Assets was $15,261 Mil.
Property, Plant and Equipment(Net PPE) was $2,890 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,061 Mil.
Selling, General & Admin. Expense(SGA) was $674 Mil.
Total Current Liabilities was $3,231 Mil.
Long-Term Debt was $2,109 Mil.
Net Income was 283 + 0 + 384 + 438 = $1,105 Mil.
Non Operating Income was 0 + 0 + 0 + 0 = $0 Mil.
Cash Flow from Operations was 545 + 488 + 684 + 243 = $1,960 Mil.
Accounts Receivable was $1,915 Mil.
Revenue was 3943 + 0 + 3703 + 3972 = $11,618 Mil.
Gross Profit was 1149 + 0 + 1076 + 1156 = $3,381 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 $704 Mil.
Total Current Liabilities was $3,918 Mil.
Long-Term Debt was $2,281 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)
=(1616 / 10798) / (1915 / 11618)
=0.14965734 / 0.16483044
=0.9079

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)
=(0 / 11618) / (955 / 10798)
=0.29101394 / 0.28681237
=1.0146

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 - (8655 + 2890) / 15261) / (1 - (8990 + 3202) / 15652)
=0.24349649 / 0.22105801
=1.1015

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
=10798 / 11618
=0.9294

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))
=(1221 / (1221 + 3202)) / (1061 / (1061 + 2890))
=0.27605697 / 0.26853961
=1.028

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)
=(674 / 10798) / (704 / 11618)
=0.06241897 / 0.06059563
=1.0301

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)
=((2109 + 3231) / 15261) / ((2281 + 3918) / 15652)
=0.34991154 / 0.39605162
=0.8835

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
=(1105 - 0 - 1960) / 15261
=-0.056

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 -2.80 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

Jun06Jun07Jun08Jun09Jun10Jun11Jun12Jun13Jun14Jun15
DSRI 1.00071.15040.98140.99321.02630.99281.49650.61651.12550.7997
GMI 0.84851.16020.76421.20060.73591.29650.64491.02580.98630.9948
AQI 1.96532.94372.16230.92330.67960.81824.20930.92431.1531.0833
SGI 1.1931.25961.47660.92311.32160.96711.30991.23020.98560.9631
DEPI 1.10361.0221.11270.85481.21510.8971.26320.67470.91161.004
SGAI 0.89710.85610.83240.98980.99761.10031.61891.14721.0291.1511
LVGI 0.79560.921.0680.86690.86910.90391.47470.96330.97870.8949
TATA 0.0053-0.0283-0.1091-0.1578-0.0764-0.1144-0.1024-0.1524-0.0774-0.0512
M-score -1.88-1.32-2.22-3.19-2.73-2.97-1.35-3.41-2.69-2.90

Western Digital Corp Quarterly Data

Sep13Dec13Mar14Jun14Sep14Dec14Mar15Jun15Sep15Dec15
DSRI 0.73051.06771.07331.12321.04840.96020.94930.77690.90790.9898
GMI 1.10021.03150.98230.98230.9710.99381.00351.00351.01461.0222
AQI 0.94041.1281.18111.1531.12590.9791.03151.08331.10151.0765
SGI 1.25671.05930.98760.98761.01980.99950.99150.99150.92940.8867
DEPI 0.77370.8650.93910.91160.91640.93880.96061.0041.0281.0396
SGAI 1.03651.07310.95390.95391.16211.05051.0691.0691.03011.1597
LVGI 1.04311.09921.10460.97870.96210.89750.89920.89490.88350.9379
TATA -0.1109-0.0982-0.0971-0.0978-0.1108-0.0822-0.0805-0.0657-0.056-0.0903
M-score -3.04-2.82-2.85-2.78-2.93-2.90-2.88-2.94-2.80-2.97
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