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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.
During the past 13 years, the highest Beneish M-Score of Westell Technologies Inc was 0.95. The lowest was -5.80. And the median was -2.91.
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 * 1.114||+||0.528 * 1.0025||+||0.404 * 1.0218||+||0.892 * 0.7971||+||0.115 * 0.8385|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9308||+||4.679 * -0.1567||-||0.327 * 1.1718|
* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.
|This Year (Dec16) TTM:||Last Year (Dec15) TTM:|
|Accounts Receivable was $11.21 Mil.|
Revenue was 14.983 + 17.78 + 14.816 + 20.904 = $68.48 Mil.
Gross Profit was 6.054 + 6.367 + 4.565 + 7.893 = $24.88 Mil.
Total Current Assets was $49.45 Mil.
Total Assets was $68.63 Mil.
Property, Plant and Equipment(Net PPE) was $2.21 Mil.
Depreciation, Depletion and Amortization(DDA) was $6.48 Mil.
Selling, General & Admin. Expense(SGA) was $20.92 Mil.
Total Current Liabilities was $14.48 Mil.
Long-Term Debt was $0.00 Mil.
Net Income was -1.807 + -5.81 + -7.768 + -5.076 = $-20.46 Mil.
Non Operating Income was -0.015 + 0.074 + 0.017 + 0.107 = $0.18 Mil.
Cash Flow from Operations was 2.954 + -4.138 + -3.852 + -4.851 = $-9.89 Mil.
|Accounts Receivable was $12.63 Mil.
Revenue was 20.215 + 25.514 + 21.57 + 18.613 = $85.91 Mil.
Gross Profit was 7.963 + 10.231 + 8.429 + 4.666 = $31.29 Mil.
Total Current Assets was $64.02 Mil.
Total Assets was $90.11 Mil.
Property, Plant and Equipment(Net PPE) was $4.29 Mil.
Depreciation, Depletion and Amortization(DDA) was $7.15 Mil.
Selling, General & Admin. Expense(SGA) was $28.19 Mil.
Total Current Liabilities was $16.23 Mil.
Long-Term Debt was $0.00 Mil.
1. DSRI = Days Sales in Receivables Index
A large increase in DSR could be indicative of revenue inflation.
|DSRI||=||(Receivables_t / Revenue_t)||/||(Receivables_t-1 / Revenue_t-1)|
|=||(11.212 / 68.483)||/||(12.626 / 85.912)|
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.
|=||(GrossProfit_t-1 / Revenue_t-1)||/||(GrossProfit_t / Revenue_t)|
|=||(31.289 / 85.912)||/||(24.879 / 68.483)|
3. AQI = Asset Quality Index
AQI is the ratio of asset quality in year t to year t-1.
|AQI||=||(1 - (CurrentAssets_t + PPE_t) / TotalAssets_t)||/||(1 - (CurrentAssets_t-1 + PPE_t-1) / TotalAssets_t-1)|
|=||(1 - (49.45 + 2.212) / 68.627)||/||(1 - (64.017 + 4.291) / 90.109)|
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.
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))|
|=||(7.152 / (7.152 + 4.291))||/||(6.477 / (6.477 + 2.212))|
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)|
|=||(20.915 / 68.483)||/||(28.188 / 85.912)|
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 + 14.484) / 68.627)||/||((0 + 16.23) / 90.109)|
8. TATA = Total Accruals to Total Assets
Total accruals calculated as the change in working capital accounts other than cash less depreciation.
|=||(NetIncome_t - NonOperatingIncome_t||-||CashFlowsfromOperations_t)||/||TotalAssets_t|
|=||(-20.461 - 0.183||-||-9.887)||/||68.627|
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 -3.34 suggests that the company will not be a manipulator.
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
Westell Technologies Inc Annual Data
Westell Technologies Inc Quarterly Data