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Western Digital Corp (NAS:WDC)
Beneish M-Score
-2.92 (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 -2.92 suggests that the company is not a manipulator.

WDC' s Beneish M-Score Range Over the Past 10 Years
Min: -16.56   Max: 14.3
Current: -2.92

-16.56
14.3

During the past 13 years, the highest Beneish M-Score of Western Digital Corp was 14.30. The lowest was -16.56. And the median was -2.81.


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 * 0.9932+0.528 * 1.0087+0.404 * 1.0765+0.892 * 0.8836+0.115 * 1.0396
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.225+4.679 * -0.0761-0.327 * 0.9379
=-2.92

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

This Year (Dec15) TTM:Last Year (Dec14) TTM:
Accounts Receivable was $1,650 Mil.
Revenue was 3317 + 3360 + 3191 + 3550 = $13,418 Mil.
Gross Profit was 906 + 955 + 930 + 1032 = $3,823 Mil.
Total Current Assets was $8,948 Mil.
Total Assets was $15,466 Mil.
Property, Plant and Equipment(Net PPE) was $2,801 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,023 Mil.
Selling, General & Admin. Expense(SGA) was $985 Mil.
Total Current Liabilities was $3,245 Mil.
Long-Term Debt was $2,062 Mil.
Net Income was 251 + 283 + 220 + 384 = $1,138 Mil.
Non Operating Income was 0 + 0 + 0 + 0 = $0 Mil.
Cash Flow from Operations was 598 + 545 + 488 + 684 = $2,315 Mil.
Accounts Receivable was $1,880 Mil.
Revenue was 3888 + 3943 + 3651 + 3703 = $15,185 Mil.
Gross Profit was 1110 + 1149 + 1029 + 1076 = $4,364 Mil.
Total Current Assets was $8,660 Mil.
Total Assets was $15,139 Mil.
Property, Plant and Equipment(Net PPE) was $3,099 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,194 Mil.
Selling, General & Admin. Expense(SGA) was $910 Mil.
Total Current Liabilities was $3,289 Mil.
Long-Term Debt was $2,250 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)
=(1650 / 13418) / (1880 / 15185)
=0.12296915 / 0.12380639
=0.9932

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)
=(955 / 15185) / (906 / 13418)
=0.28738887 / 0.28491578
=1.0087

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 - (8948 + 2801) / 15466) / (1 - (8660 + 3099) / 15139)
=0.24033364 / 0.22326442
=1.0765

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
=13418 / 15185
=0.8836

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))
=(1194 / (1194 + 3099)) / (1023 / (1023 + 2801))
=0.27812718 / 0.26752092
=1.0396

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)
=(985 / 13418) / (910 / 15185)
=0.07340885 / 0.05992756
=1.225

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)
=((2062 + 3245) / 15466) / ((2250 + 3289) / 15139)
=0.34313979 / 0.36587621
=0.9379

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
=(1138 - 0 - 2315) / 15466
=-0.0761

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 -2.92 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 0.0129-0.0186-0.1091-0.1578-0.0764-0.1144-0.1024-0.1524-0.0774-0.0512
M-score -1.84-1.27-2.22-3.19-2.73-2.97-1.35-3.41-2.69-2.90

Western Digital Corp Quarterly Data

Sep13Dec13Mar14Jun14Sep14Dec14Mar15Jun15Sep15Dec15
DSRI 0.8391.15921.14161.12551.05880.96490.95210.79970.92110.9932
GMI 1.09951.05061.01420.98630.97760.9951.00250.99481.00331.0087
AQI 0.94041.1281.18111.1531.12590.9791.03151.08331.10151.0765
SGI 1.09410.97570.92860.98561.00990.99460.98850.96310.91620.8836
DEPI 0.77370.8650.93910.91160.91640.93880.96061.0041.0281.0396
SGAI 1.0011.03360.94971.0291.19281.1051.12081.15111.12161.225
LVGI 1.04311.09921.10460.97870.96210.89750.89920.89490.88350.9379
TATA -0.1288-0.1156-0.1143-0.0774-0.0906-0.0612-0.0596-0.0512-0.0416-0.0761
M-score -3.16-2.87-2.90-2.69-2.83-2.81-2.79-2.90-2.76-2.92
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