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Westell Technologies Inc (NAS:WSTL)
Beneish M-Score
2.29 (As of Today)

Warning Sign:

Beneish M-Score 2.29 higher than -2.22, which implies that it might have manipulated its financial results.

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.

Westell Technologies Inc has a M-score of 2.29 signals that the company is a manipulator.

WSTL' s 10-Year Beneish M-Score Range
Min: -5.46   Max: 2.29
Current: 2.29

-5.46
2.29

During the past 13 years, the highest Beneish M-Score of Westell Technologies Inc was 2.29. The lowest was -5.46. And the median was -2.72.


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 Westell Technologies Inc 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 * 0.901+0.528 * 0.8353+0.404 * 10.1007+0.892 * 2.6302+0.115 * 0.7583
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.6492+4.679 * 0.0238-0.327 * 2.0131
=2.29

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

This Year (Mar14) TTM:Last Year (Mar13) TTM:
Accounts Receivable was $15.9 Mil.
Revenue was 24.421 + 25.236 + 29.96 + 22.456 = $102.1 Mil.
Gross Profit was 8.524 + 12.235 + 12.423 + 8.776 = $42.0 Mil.
Total Current Assets was $95.6 Mil.
Total Assets was $161.0 Mil.
Property, Plant and Equipment(Net PPE) was $1.9 Mil.
Depreciation, Depletion and Amortization(DDA) was $5.5 Mil.
Selling, General & Admin. Expense(SGA) was $28.7 Mil.
Total Current Liabilities was $18.4 Mil.
Long-Term Debt was $0.0 Mil.
Net Income was 4.878 + 1.925 + 1.328 + -2.764 = $5.4 Mil.
Non Operating Income was 0.007 + -0.031 + 0.098 + -0.13 = $-0.1 Mil.
Cash Flow from Operations was 0.906 + 5.018 + -1.219 + -3.108 = $1.6 Mil.
Accounts Receivable was $6.7 Mil.
Revenue was 10.663 + 8.873 + 9.854 + 9.418 = $38.8 Mil.
Gross Profit was 4.013 + 3.09 + 3.449 + 2.773 = $13.3 Mil.
Total Current Assets was $135.8 Mil.
Total Assets was $142.4 Mil.
Property, Plant and Equipment(Net PPE) was $1.1 Mil.
Depreciation, Depletion and Amortization(DDA) was $1.4 Mil.
Selling, General & Admin. Expense(SGA) was $16.8 Mil.
Total Current Liabilities was $8.1 Mil.
Long-Term Debt was $0.0 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)
=(15.851 / 102.073) / (6.689 / 38.808)
=0.15529082 / 0.17236137
=0.901

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)
=(12.235 / 38.808) / (8.524 / 102.073)
=0.34335704 / 0.41105875
=0.8353

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 - (95.582 + 1.946) / 160.974) / (1 - (135.798 + 1.081) / 142.437)
=0.39413818 / 0.03902076
=10.1007

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
=102.073 / 38.808
=2.6302

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))
=(1.381 / (1.381 + 1.081)) / (5.53 / (5.53 + 1.946))
=0.56092608 / 0.73970037
=0.7583

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)
=(28.69 / 102.073) / (16.802 / 38.808)
=0.28107335 / 0.43295197
=0.6492

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)
=((0 + 18.38) / 160.974) / ((0 + 8.079) / 142.437)
=0.11417993 / 0.05671981
=2.0131

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
=(5.367 - -0.056 - 1.597) / 160.974
=0.0238

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.

Westell Technologies Inc has a M-score of 2.29 signals that the company is likely to 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.

Westell Technologies Inc Annual Data

Mar05Mar06Mar07Mar08Mar09Mar10Mar11Mar12Mar13Mar14
DSRI 1.10530.9530.93930.93641.19740.86981.68350.49982.10260.901
GMI 1.12590.99160.91721.111.08130.86591.1310.84170.97240.8353
AQI 1.02470.8990.92910.36680.98040.8492.92250.57750.222910.1007
SGI 1.14651.04780.91850.80130.89210.97620.81470.47110.55712.6302
DEPI 0.95360.91031.01520.83081.0331.02080.98830.71841.12620.7583
SGAI 0.91460.99821.25851.24511.03760.76690.72121.54112.13710.6492
LVGI 0.76750.78161.08341.26841.15390.81240.82360.32811.01232.0131
TATA 0.0889-0.1035-0.1637-0.511-0.0221-0.05910.21690.0757-0.22530.0238
M-score -1.67-2.95-3.52-5.45-2.52-2.93-0.05-3.22-3.432.29

Westell Technologies Inc Quarterly Data

Dec11Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14
DSRI 0.43360.57030.85070.88792.22992.10262.29212.24831.11910.901
GMI 1.12330.91970.93550.86150.85450.97240.84810.84140.81950.8353
AQI 1.88080.57750.90990.96061.53280.22290.95120.80440.751510.1007
SGI 0.57570.41290.37090.3740.4080.55710.92791.5992.2372.6302
DEPI 0.70310.71840.71730.77311.21421.12620.88980.76520.68440.7583
SGAI 0.98441.32151.75242.24962.39852.13711.44590.94380.71970.6492
LVGI 0.18940.19190.2630.43090.98021.73082.56993.19891.98992.0131
TATA 0.33840.07570.1010.10310.0087-0.2253-0.2258-0.2046-0.22960.0238
M-score -1.14-3.08-2.70-2.80-1.91-3.66-3.11-2.65-2.852.29
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