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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.
Aruba Networks Inc has a M-score of -3.82 suggests that the company is not a manipulator.
During the past 12 years, the highest Beneish M-Score of Aruba Networks Inc was -1.30. The lowest was -4.13. And the median was -3.40.
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 Aruba Networks 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 * 1.0492||+||0.528 * 1.0138||+||0.404 * 1.2538||+||0.892 * 1.1165||+||0.115 * 0.9206|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0534||+||4.679 * -0.2977||-||0.327 * 1.5667|
|This Year (Jan14) TTM:||Last Year (Jan13) TTM:|
|Accounts Receivable was $82.2 Mil.|
Revenue was 176.356 + 160.927 + 153.064 + 147.136 = $637.5 Mil.
Gross Profit was 123.003 + 112.376 + 107.331 + 103.164 = $445.9 Mil.
Total Current Assets was $456.1 Mil.
Total Assets was $601.7 Mil.
Property, Plant and Equipment(Net PPE) was $27.4 Mil.
Depreciation, Depletion and Amortization(DDA) was $27.1 Mil.
Selling, General & Admin. Expense(SGA) was $307.8 Mil.
Total Current Liabilities was $223.8 Mil.
Long-Term Debt was $0.0 Mil.
Net Income was -10.701 + -7.827 + -15.581 + -20.191 = $-54.3 Mil.
Non Operating Income was -0.08 + 0.27 + -0.487 + -0.114 = $-0.4 Mil.
Cash Flow from Operations was 33.355 + 21.248 + 45.31 + 25.314 = $125.2 Mil.
|Accounts Receivable was $70.1 Mil.
Revenue was 155.362 + 144.482 + 139.248 + 131.894 = $571.0 Mil.
Gross Profit was 110.706 + 102.364 + 99.418 + 92.383 = $404.9 Mil.
Total Current Assets was $568.3 Mil.
Total Assets was $703.3 Mil.
Property, Plant and Equipment(Net PPE) was $24.9 Mil.
Depreciation, Depletion and Amortization(DDA) was $21.0 Mil.
Selling, General & Admin. Expense(SGA) was $261.7 Mil.
Total Current Liabilities was $167.0 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)|
|=||(82.152 / 637.483)||/||(70.129 / 570.986)|
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)|
|=||(112.376 / 570.986)||/||(123.003 / 637.483)|
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 - (456.1 + 27.432) / 601.703)||/||(1 - (568.26 + 24.917) / 703.345)|
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))|
|=||(21.008 / (21.008 + 24.917))||/||(27.092 / (27.092 + 27.432))|
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)|
|=||(307.764 / 637.483)||/||(261.682 / 570.986)|
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 + 223.791) / 601.703)||/||((0 + 166.972) / 703.345)|
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|
|=||(-54.3 - -0.411||-||125.227)||/||601.703|
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.
Aruba Networks Inc has a M-score of -3.82 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
Aruba Networks Inc Annual Data
Aruba Networks Inc Quarterly Data