Switch to:
GuruFocus has detected 6 Warning Signs with Western Digital Corp $WDC.
More than 500,000 people have already joined GuruFocus to track the stocks they follow and exchange investment ideas.
Western Digital Corp (NAS:WDC)
Beneish M-Score
-2.28 (As of Today)

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.

Western Digital Corp has a M-score of -2.28 suggests that the company is not a manipulator.

WDC' s Beneish M-Score Range Over the Past 10 Years
Min: -16.56   Max: 14.3
Current: -2.28

-16.56
14.3

During the past 13 years, the highest Beneish M-Score of Western Digital Corp was 14.30. The lowest was -16.56. And the median was -2.78.


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 Western Digital Corp 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 * 1.1108+0.528 * 0.9509+0.404 * 2.3123+0.892 * 1.3984+0.115 * 0.683
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.1236+4.679 * -0.092-0.327 * 1.8277
=-2.28

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

This Year (Mar17) TTM:Last Year (Mar16) TTM:
Accounts Receivable was $1,948 Mil.
Revenue was 4649 + 4888 + 4714 + 3495 = $17,746 Mil.
Gross Profit was 1523 + 1533 + 1335 + 821 = $5,212 Mil.
Total Current Assets was $10,313 Mil.
Total Assets was $29,448 Mil.
Property, Plant and Equipment(Net PPE) was $3,099 Mil.
Depreciation, Depletion and Amortization(DDA) was $2,002 Mil.
Selling, General & Admin. Expense(SGA) was $1,774 Mil.
Total Current Liabilities was $4,309 Mil.
Long-Term Debt was $12,907 Mil.
Net Income was 248 + 235 + -366 + -366 = $-249 Mil.
Non Operating Income was -23 + -24 + -272 + -75 = $-394 Mil.
Cash Flow from Operations was 998 + 1060 + 440 + 355 = $2,853 Mil.
Accounts Receivable was $1,254 Mil.
Revenue was 2822 + 3317 + 3360 + 3191 = $12,690 Mil.
Gross Profit was 753 + 906 + 955 + 930 = $3,544 Mil.
Total Current Assets was $8,740 Mil.
Total Assets was $14,947 Mil.
Property, Plant and Equipment(Net PPE) was $2,687 Mil.
Depreciation, Depletion and Amortization(DDA) was $984 Mil.
Selling, General & Admin. Expense(SGA) was $1,129 Mil.
Total Current Liabilities was $2,781 Mil.
Long-Term Debt was $2,000 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)
=(1948 / 17746) / (1254 / 12690)
=0.10977122 / 0.09881797
=1.1108

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)
=(3544 / 12690) / (5212 / 17746)
=0.27927502 / 0.29369999
=0.9509

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 - (10313 + 3099) / 29448) / (1 - (8740 + 2687) / 14947)
=0.54455311 / 0.23549876
=2.3123

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
=17746 / 12690
=1.3984

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))
=(984 / (984 + 2687)) / (2002 / (2002 + 3099))
=0.26804685 / 0.39247206
=0.683

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)
=(1774 / 17746) / (1129 / 12690)
=0.09996619 / 0.08896769
=1.1236

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)
=((12907 + 4309) / 29448) / ((2000 + 2781) / 14947)
=0.58462374 / 0.31986352
=1.8277

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
=(-249 - -394 - 2853) / 29448
=-0.092

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.

Western Digital Corp has a M-score of -2.28 suggests that the company will not 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 local exchange's currency.

Western Digital Corp Annual Data

Jun07Jun08Jun09Jun10Jun11Jun12Jun13Jun14Jun15Jun16
DSRI 1.15020.98150.99321.02630.99281.49650.61651.12550.79971.0695
GMI 1.15910.76451.19990.73591.29650.64491.02580.98630.99481.0958
AQI 2.94372.16230.92330.67960.81824.20930.92431.1531.08212.0975
SGI 1.25981.47630.92311.32160.96711.30991.23020.98560.96310.8917
DEPI 1.0221.11270.85481.21510.8971.26320.67470.91161.0041.1021
SGAI 0.85590.82870.98931.00261.10031.61891.14721.09151.10231.5612
LVGI 0.921.0680.86690.86910.90391.47470.96330.97870.89381.766
TATA -0.0186-0.1091-0.1576-0.0766-0.1144-0.1024-0.1524-0.0775-0.0513-0.0507
M-score -1.27-2.22-3.19-2.73-2.97-1.35-3.41-2.70-2.89-2.59

Western Digital Corp Quarterly Data

Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16Dec16Mar17
DSRI 0.96490.95210.79970.92110.99320.87581.06951.22051.02371.1108
GMI 0.9951.00250.99481.00331.00871.0291.09581.08271.02110.9509
AQI 0.9791.03151.08211.10151.07650.9672.09752.33982.31652.3123
SGI 0.99460.98850.96310.91620.88360.84420.89171.02571.18641.3984
DEPI 0.93880.96061.0041.0281.03961.03541.10210.90110.78070.683
SGAI 1.16821.18611.10231.07941.2141.41521.56121.54531.38441.1236
LVGI 0.89750.89920.89380.88350.93790.89551.7661.67221.71311.8277
TATA -0.0614-0.0597-0.0513-0.0417-0.0762-0.0863-0.0507-0.0668-0.0826-0.092
M-score -2.82-2.80-2.89-2.75-2.92-3.17-2.59-2.31-2.46-2.28
Get WordPress Plugins for easy affiliate links on Stock Tickers and Guru Names | Earn affiliate commissions by embedding GuruFocus Charts
GuruFocus Affiliate Program: Earn up to $400 per referral. ( Learn More)
FEEDBACK