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GuruFocus has detected 3 Warning Signs with Westell Technologies Inc $WSTL.
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Westell Technologies Inc (NAS:WSTL)
Beneish M-Score
-3.34 (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.

Westell Technologies Inc has a M-score of -3.34 suggests that the company is not a manipulator.

WSTL' s Beneish M-Score Range Over the Past 10 Years
Min: -5.8   Max: 0.95
Current: -3.34

-5.8
0.95

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.


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 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
=-3.34

* 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

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)
=(11.212 / 68.483) / (12.626 / 85.912)
=0.16371946 / 0.14696434
=1.114

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)
=(31.289 / 85.912) / (24.879 / 68.483)
=0.36419825 / 0.36328724
=1.0025

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 - (49.45 + 2.212) / 68.627) / (1 - (64.017 + 4.291) / 90.109)
=0.24720591 / 0.24194032
=1.0218

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
=68.483 / 85.912
=0.7971

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))
=0.62501092 / 0.74542525
=0.8385

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)
=0.30540426 / 0.32810318
=0.9308

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)
=0.21105396 / 0.18011519
=1.1718

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
=(-20.461 - 0.183 - -9.887) / 68.627
=-0.1567

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.


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.

Westell Technologies Inc Annual Data

Mar07Mar08Mar09Mar10Mar11Mar12Mar13Mar14Mar15Mar16
DSRI 0.93930.93641.19740.86981.68350.79791.3170.89980.90781.3174
GMI 0.91721.111.08130.86591.1310.7141.21070.82011.24380.8144
AQI 0.92910.36680.98040.8492.92250.57750.222910.21640.66160.9066
SGI 0.91850.80130.89210.97620.81470.29510.88952.63020.82421.0485
DEPI 1.01520.83081.0331.02080.98830.71841.12620.83380.99961.0501
SGAI 1.25851.24511.03760.76690.72122.23861.40920.64571.20240.9034
LVGI 1.08341.26841.15390.81240.82360.19191.73082.19041.16261.3872
TATA -0.1637-0.5829-0.0221-0.05910.21690.2361-0.22530.0175-0.4995-0.1252
M-score -3.52-5.79-2.52-2.93-0.05-2.49-3.842.24-5.15-2.97

Westell Technologies Inc Quarterly Data

Sep14Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16Dec16
DSRI 0.39710.56680.90781.1791.82181.85321.31740.72010.86131.114
GMI 0.99851.20161.24381.18351.07440.92310.81440.8720.95661.0025
AQI 2.04581.48130.66160.62320.66630.94520.90661.05081.08451.0218
SGI 1.40551.01830.82420.72480.78850.95531.04851.04590.92440.7971
DEPI 1.07581.09820.99961.05611.14031.13091.05010.92570.83670.8385
SGAI 0.90241.06261.20241.35941.29241.15370.90340.90030.94420.9308
LVGI 0.80080.96981.16261.60781.83811.98481.38721.01691.11981.1718
TATA -0.1313-0.353-0.4995-0.5303-0.3918-0.2094-0.1252-0.1546-0.142-0.1567
M-score -2.77-4.20-5.15-5.35-4.15-3.11-2.97-3.46-3.38-3.34
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