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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 -3.43 suggests that the company is not a manipulator.
During the past 13 years, the highest Beneish M-Score of Aruba Networks Inc was -1.30. The lowest was -3.61. And the median was -3.43.
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 * 0.9033||+||0.528 * 1.0206||+||0.404 * 1.1702||+||0.892 * 1.2148||+||0.115 * 0.8901|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.978||+||4.679 * -0.2247||-||0.327 * 1.2352|
|This Year (Jul14) TTM:||Last Year (Jul13) TTM:|
|Accounts Receivable was $102.3 Mil.|
Revenue was 202.862 + 188.788 + 176.356 + 160.927 = $728.9 Mil.
Gross Profit was 139.879 + 128.894 + 123.003 + 112.376 = $504.2 Mil.
Total Current Assets was $483.5 Mil.
Total Assets was $629.7 Mil.
Property, Plant and Equipment(Net PPE) was $27.3 Mil.
Depreciation, Depletion and Amortization(DDA) was $29.5 Mil.
Selling, General & Admin. Expense(SGA) was $334.8 Mil.
Total Current Liabilities was $239.5 Mil.
Long-Term Debt was $0.0 Mil.
Net Income was -4.086 + -6.351 + -10.701 + -7.827 = $-29.0 Mil.
Non Operating Income was -0.165 + -0.198 + -0.08 + 0.27 = $-0.2 Mil.
Cash Flow from Operations was 30.725 + 27.364 + 33.355 + 21.248 = $112.7 Mil.
|Accounts Receivable was $93.2 Mil.
Revenue was 153.064 + 147.136 + 155.362 + 144.482 = $600.0 Mil.
Gross Profit was 107.331 + 103.164 + 110.706 + 102.364 = $423.6 Mil.
Total Current Assets was $598.7 Mil.
Total Assets was $746.7 Mil.
Property, Plant and Equipment(Net PPE) was $27.5 Mil.
Depreciation, Depletion and Amortization(DDA) was $23.7 Mil.
Selling, General & Admin. Expense(SGA) was $281.8 Mil.
Total Current Liabilities was $230.0 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)|
|=||(102.256 / 728.933)||/||(93.191 / 600.044)|
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)|
|=||(128.894 / 600.044)||/||(139.879 / 728.933)|
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 - (483.505 + 27.261) / 629.66)||/||(1 - (598.71 + 27.536) / 746.743)|
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))|
|=||(23.701 / (23.701 + 27.536))||/||(29.495 / (29.495 + 27.261))|
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)|
|=||(334.839 / 728.933)||/||(281.835 / 600.044)|
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 + 239.501) / 629.66)||/||((0 + 229.95) / 746.743)|
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|
|=||(-28.965 - -0.173||-||112.692)||/||629.66|
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 -3.43 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