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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 -3.48 suggests that the company is not a manipulator.
During the past 12 years, the highest Beneish M-Score of Aruba Networks Inc was -1.28. The lowest was -4.16. And the median was -3.44.
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 * 1.1586||+||0.528 * 1.021||+||0.404 * 1.3608||+||0.892 * 1.1585||+||0.115 * 0.8906|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0292||+||4.679 * -0.2642||-||0.327 * 1.5797|
|This Year (Apr14) TTM:||Last Year (Apr13) TTM:|
|Accounts Receivable was $95.3 Mil.|
Revenue was 188.788 + 176.356 + 160.927 + 153.064 = $679.1 Mil.
Gross Profit was 128.894 + 123.003 + 112.376 + 107.331 = $471.6 Mil.
Total Current Assets was $488.0 Mil.
Total Assets was $632.9 Mil.
Property, Plant and Equipment(Net PPE) was $27.4 Mil.
Depreciation, Depletion and Amortization(DDA) was $28.1 Mil.
Selling, General & Admin. Expense(SGA) was $322.6 Mil.
Total Current Liabilities was $228.8 Mil.
Long-Term Debt was $0.0 Mil.
Net Income was -6.351 + -10.701 + -7.827 + -15.581 = $-40.5 Mil.
Non Operating Income was -0.198 + -0.08 + 0.27 + -0.487 = $-0.5 Mil.
Cash Flow from Operations was 27.364 + 33.355 + 21.248 + 45.31 = $127.3 Mil.
|Accounts Receivable was $71.0 Mil.
Revenue was 147.136 + 155.362 + 144.482 + 139.248 = $586.2 Mil.
Gross Profit was 103.164 + 110.706 + 102.364 + 99.418 = $415.7 Mil.
Total Current Assets was $604.6 Mil.
Total Assets was $731.0 Mil.
Property, Plant and Equipment(Net PPE) was $26.6 Mil.
Depreciation, Depletion and Amortization(DDA) was $21.9 Mil.
Selling, General & Admin. Expense(SGA) was $270.6 Mil.
Total Current Liabilities was $167.3 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)|
|=||(95.32 / 679.135)||/||(71.014 / 586.228)|
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)|
|=||(123.003 / 586.228)||/||(128.894 / 679.135)|
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 - (487.965 + 27.403) / 632.911)||/||(1 - (604.646 + 26.607) / 731.02)|
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))|
|=||(21.882 / (21.882 + 26.607))||/||(28.147 / (28.147 + 27.403))|
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)|
|=||(322.613 / 679.135)||/||(270.589 / 586.228)|
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 + 228.784) / 632.911)||/||((0 + 167.276) / 731.02)|
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|
|=||(-40.46 - -0.495||-||127.277)||/||632.911|
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 -3.48 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