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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 -2.93.
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 * 1.3174||+||0.528 * 0.8144||+||0.404 * 0.9066||+||0.892 * 1.0485||+||0.115 * 1.0501|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9034||+||4.679 * -0.1252||-||0.327 * 1.3872|
|This Year (Mar16) TTM:||Last Year (Mar15) TTM:|
|Accounts Receivable was $16.36 Mil.|
Revenue was 20.904 + 20.215 + 25.514 + 21.57 = $88.20 Mil.
Gross Profit was 7.893 + 7.963 + 10.231 + 8.429 = $34.52 Mil.
Total Current Assets was $61.48 Mil.
Total Assets was $86.03 Mil.
Property, Plant and Equipment(Net PPE) was $3.98 Mil.
Depreciation, Depletion and Amortization(DDA) was $7.10 Mil.
Selling, General & Admin. Expense(SGA) was $25.65 Mil.
Total Current Liabilities was $17.24 Mil.
Long-Term Debt was $0.00 Mil.
Net Income was -5.076 + -4.797 + -2.473 + -3.866 = $-16.21 Mil.
Non Operating Income was 0.107 + 0.085 + -0.061 + 0.038 = $0.17 Mil.
Cash Flow from Operations was -4.851 + -0.987 + 0.84 + -0.609 = $-5.61 Mil.
|Accounts Receivable was $11.85 Mil.
Revenue was 18.613 + 14.043 + 23.646 + 27.825 = $84.13 Mil.
Gross Profit was 4.666 + 4.395 + 8.065 + 9.684 = $26.81 Mil.
Total Current Assets was $69.53 Mil.
Total Assets was $99.33 Mil.
Property, Plant and Equipment(Net PPE) was $3.60 Mil.
Depreciation, Depletion and Amortization(DDA) was $7.42 Mil.
Selling, General & Admin. Expense(SGA) was $27.09 Mil.
Total Current Liabilities was $14.35 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)|
|=||(16.361 / 88.203)||/||(11.845 / 84.127)|
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)|
|=||(26.81 / 84.127)||/||(34.516 / 88.203)|
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 - (61.483 + 3.977) / 86.031)||/||(1 - (69.531 + 3.603) / 99.334)|
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))|
|=||(7.416 / (7.416 + 3.603))||/||(7.098 / (7.098 + 3.977))|
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)|
|=||(25.653 / 88.203)||/||(27.085 / 84.127)|
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 + 17.237) / 86.031)||/||((0 + 14.347) / 99.334)|
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|
|=||(-16.212 - 0.169||-||-5.607)||/||86.031|
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 -2.97 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