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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 2.24. The lowest was -8.61. And the median was -2.88.
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 * 0.8613||+||0.528 * 0.9566||+||0.404 * 1.0845||+||0.892 * 0.9244||+||0.115 * 0.8367|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9442||+||4.679 * -0.142||-||0.327 * 1.1198|
|This Year (Sep16) TTM:||Last Year (Sep15) TTM:|
|Accounts Receivable was $13.64 Mil.|
Revenue was 17.78 + 14.816 + 20.904 + 20.215 = $73.72 Mil.
Gross Profit was 6.367 + 4.565 + 7.893 + 7.963 = $26.79 Mil.
Total Current Assets was $49.16 Mil.
Total Assets was $69.77 Mil.
Property, Plant and Equipment(Net PPE) was $2.45 Mil.
Depreciation, Depletion and Amortization(DDA) was $6.83 Mil.
Selling, General & Admin. Expense(SGA) was $23.72 Mil.
Total Current Liabilities was $13.86 Mil.
Long-Term Debt was $0.00 Mil.
Net Income was -5.81 + -7.768 + -5.076 + -4.797 = $-23.45 Mil.
Non Operating Income was 0.074 + 0.017 + 0.107 + 0.085 = $0.28 Mil.
Cash Flow from Operations was -4.138 + -3.852 + -4.851 + -0.987 = $-13.83 Mil.
|Accounts Receivable was $17.13 Mil.
Revenue was 25.514 + 21.57 + 18.613 + 14.043 = $79.74 Mil.
Gross Profit was 10.231 + 8.429 + 4.666 + 4.395 = $27.72 Mil.
Total Current Assets was $69.18 Mil.
Total Assets was $96.90 Mil.
Property, Plant and Equipment(Net PPE) was $4.47 Mil.
Depreciation, Depletion and Amortization(DDA) was $7.16 Mil.
Selling, General & Admin. Expense(SGA) was $27.18 Mil.
Total Current Liabilities was $17.19 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)|
|=||(13.639 / 73.715)||/||(17.13 / 79.74)|
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)|
|=||(27.721 / 79.74)||/||(26.788 / 73.715)|
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 - (49.157 + 2.454) / 69.766)||/||(1 - (69.18 + 4.468) / 96.898)|
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))|
|=||(7.156 / (7.156 + 4.468))||/||(6.833 / (6.833 + 2.454))|
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)|
|=||(23.722 / 73.715)||/||(27.177 / 79.74)|
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 + 13.855) / 69.766)||/||((0 + 17.185) / 96.898)|
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|
|=||(-23.451 - 0.283||-||-13.828)||/||69.766|
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 -3.38 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