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Western Digital Corporation (NAS:WDC)
Beneish M-Score
-2.86 (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 Corporation has a M-score of -2.86 suggests that the company is not a manipulator.

WDC' s 10-Year Beneish M-Score Range
Min: -16.56   Max: 14.28
Current: -2.86

-16.56
14.28

During the past 13 years, the highest Beneish M-Score of Western Digital Corporation was 14.28. The lowest was -16.56. And the median was -2.79.


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 Corporation 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 * 1.1592+0.528 * 1.0569+0.404 * 1.128+0.892 * 0.9757+0.115 * 0.865
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9949+4.679 * -0.1156-0.327 * 1.0992
=-2.86

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

This Year (Dec13) TTM:Last Year (Dec12) TTM:
Accounts Receivable was $1,959 Mil.
Revenue was 3972 + 3804 + 3728 + 3764 = $15,268 Mil.
Gross Profit was 1141 + 1088 + 1050 + 1061 = $4,340 Mil.
Total Current Assets was $8,288 Mil.
Total Assets was $15,282 Mil.
Property, Plant and Equipment(Net PPE) was $3,509 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,240 Mil.
Selling, General & Admin. Expense(SGA) was $797 Mil.
Total Current Liabilities was $4,620 Mil.
Long-Term Debt was $1,610 Mil.
Net Income was 430 + 495 + -265 + 391 = $1,051 Mil.
Non Operating Income was 0 + 0 + 0 + 0 = $0 Mil.
Cash Flow from Operations was 726 + 680 + 684 + 727 = $2,817 Mil.
Accounts Receivable was $1,732 Mil.
Revenue was 3824 + 4035 + 4754 + 3035 = $15,648 Mil.
Gross Profit was 1059 + 1193 + 1472 + 977 = $4,701 Mil.
Total Current Assets was $7,175 Mil.
Total Assets was $13,929 Mil.
Property, Plant and Equipment(Net PPE) was $3,938 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,149 Mil.
Selling, General & Admin. Expense(SGA) was $821 Mil.
Total Current Liabilities was $3,326 Mil.
Long-Term Debt was $1,840 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)
=(1959 / 15268) / (1732 / 15648)
=0.12830757 / 0.11068507
=1.1592

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)
=(1088 / 15648) / (1141 / 15268)
=0.30042178 / 0.28425465
=1.0569

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 - (8288 + 3509) / 15282) / (1 - (7175 + 3938) / 13929)
=0.22804607 / 0.20216814
=1.128

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
=15268 / 15648
=0.9757

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))
=(1149 / (1149 + 3938)) / (1240 / (1240 + 3509))
=0.22586986 / 0.2611076
=0.865

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)
=(797 / 15268) / (821 / 15648)
=0.05220068 / 0.05246677
=0.9949

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)
=((1610 + 4620) / 15282) / ((1840 + 3326) / 13929)
=0.40766915 / 0.3708809
=1.0992

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
=(1051 - 0 - 2817) / 15282
=-0.1156

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 Corporation has a M-score of -2.86 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 Corporation Annual Data

Jun04Jun05Jun06Jun07Jun08Jun09Jun10Jun11Jun12Jun13
DSRI 1.07741.00071.15040.98140.99321.02630.99281.49650.6165
GMI 0.93460.84851.16020.76421.20060.73591.29650.64491.0258
AQI 0.33271.96532.94372.16230.92330.67960.81824.20930.9243
SGI 1.19431.1931.25961.47660.92311.32160.96711.30991.2302
DEPI 1.07471.10361.0221.11270.85481.21510.8971.26320.6747
SGAI 1.2240.89710.85610.83240.98980.99761.10031.61891.1472
LVGI 0.9730.79560.921.0680.86690.86910.90391.47470.9633
TATA -0.170.0053-0.0283-0.1091-0.1578-0.0764-0.1144-0.1024-0.1524
M-score -3.36-1.88-1.32-2.22-3.19-2.73-2.97-1.35-3.41

Western Digital Corporation Quarterly Data

Sep11Dec11Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13
DSRI 1.04570.63281.90521.49651.02281.38450.44220.61650.8391.1592
GMI 1.20020.96450.75090.64490.62140.73670.89051.02581.10241.0569
AQI 0.66850.71633.57784.20935.32484.96331.00230.92430.94041.128
SGI 0.97870.94441.06541.30991.40671.67471.61721.23021.09410.9757
DEPI 0.89470.89151.56231.26321.10560.98590.52850.67470.77370.865
SGAI 1.17641.30731.39151.61891.62691.43351.3331.14720.98690.9949
LVGI 0.91080.67761.61161.47471.36171.80740.7970.96331.04311.0992
TATA -0.1003-0.1027-0.0937-0.1024-0.1241-0.1409-0.113-0.1524-0.1288-0.1156
M-score -2.97-3.44-1.32-1.35-1.34-1.06-3.07-3.41-3.15-2.86
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