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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 2.29. The lowest was -5.46. And the median was -2.72.
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 * 0.5668||+||0.528 * 1.1677||+||0.404 * 1.4813||+||0.892 * 1.0183||+||0.115 * 1.0974|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0865||+||4.679 * -0.3356||-||0.327 * 0.9698|
|This Year (Dec14) TTM:||Last Year (Dec13) TTM:|
|Accounts Receivable was $7.1 Mil.|
Revenue was 14.043 + 23.646 + 27.825 + 24.421 = $89.9 Mil.
Gross Profit was 4.395 + 8.065 + 9.684 + 9.587 = $31.7 Mil.
Total Current Assets was $77.6 Mil.
Total Assets was $108.3 Mil.
Property, Plant and Equipment(Net PPE) was $2.9 Mil.
Depreciation, Depletion and Amortization(DDA) was $7.1 Mil.
Selling, General & Admin. Expense(SGA) was $26.9 Mil.
Total Current Liabilities was $9.8 Mil.
Long-Term Debt was $0.0 Mil.
Net Income was -27.54 + -14.649 + -2.818 + 4.878 = $-40.1 Mil.
Non Operating Income was -0.029 + -0.016 + 0.061 + 0.007 = $0.0 Mil.
Cash Flow from Operations was -4.517 + 2.305 + -2.519 + 0.906 = $-3.8 Mil.
|Accounts Receivable was $12.4 Mil.
Revenue was 25.236 + 29.96 + 22.456 + 10.663 = $88.3 Mil.
Gross Profit was 11.932 + 12.022 + 8.417 + 4.013 = $36.4 Mil.
Total Current Assets was $122.7 Mil.
Total Assets was $149.9 Mil.
Property, Plant and Equipment(Net PPE) was $1.3 Mil.
Depreciation, Depletion and Amortization(DDA) was $4.4 Mil.
Selling, General & Admin. Expense(SGA) was $24.3 Mil.
Total Current Liabilities was $14.0 Mil.
Long-Term Debt was $0.0 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)|
|=||(7.132 / 89.935)||/||(12.357 / 88.315)|
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)|
|=||(8.065 / 88.315)||/||(4.395 / 89.935)|
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 - (77.61 + 2.934) / 108.255)||/||(1 - (122.744 + 1.267) / 149.918)|
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))|
|=||(4.395 / (4.395 + 1.267))||/||(7.092 / (7.092 + 2.934))|
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)|
|=||(26.936 / 89.935)||/||(24.346 / 88.315)|
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 + 9.824) / 108.255)||/||((0 + 14.029) / 149.918)|
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|
|=||(-40.129 - 0.023||-||-3.825)||/||108.255|
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 -4.14 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