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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.
During the past 13 years, the highest Beneish M-Score of Check Point Software Technologies Ltd was 49.78. The lowest was -3.25. And the median was -2.50.
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 Check Point Software Technologies Ltd 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 * 1.0812||+||0.528 * 0.9985||+||0.404 * 1.0299||+||0.892 * 1.0755||+||0.115 * 1.1027|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.062||+||4.679 * -0.0568||-||0.327 * 1.07|
|This Year (Sep16) TTM:||Last Year (Sep15) TTM:|
|Accounts Receivable was $255 Mil.|
Revenue was 427.574 + 422.749 + 404.271 + 458.072 = $1,713 Mil.
Gross Profit was 377.404 + 374.651 + 359.262 + 403.352 = $1,515 Mil.
Total Current Assets was $1,529 Mil.
Total Assets was $5,003 Mil.
Property, Plant and Equipment(Net PPE) was $58 Mil.
Depreciation, Depletion and Amortization(DDA) was $15 Mil.
Selling, General & Admin. Expense(SGA) was $494 Mil.
Total Current Liabilities was $1,001 Mil.
Long-Term Debt was $0 Mil.
Net Income was 169.652 + 165.819 + 167.422 + 194.604 = $697 Mil.
Non Operating Income was 0 + 0 + 0 + 0 = $0 Mil.
Cash Flow from Operations was 213.924 + 202.45 + 323.748 + 241.59 = $982 Mil.
|Accounts Receivable was $219 Mil.
Revenue was 403.856 + 395.334 + 372.576 + 420.642 = $1,592 Mil.
Gross Profit was 356.452 + 349.731 + 331.246 + 368.719 = $1,406 Mil.
Total Current Assets was $1,593 Mil.
Total Assets was $4,858 Mil.
Property, Plant and Equipment(Net PPE) was $44 Mil.
Depreciation, Depletion and Amortization(DDA) was $13 Mil.
Selling, General & Admin. Expense(SGA) was $433 Mil.
Total Current Liabilities was $909 Mil.
Long-Term Debt was $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)|
|=||(254.716 / 1712.666)||/||(219.054 / 1592.408)|
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)|
|=||(1406.148 / 1592.408)||/||(1514.669 / 1712.666)|
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 - (1529.398 + 57.994) / 5003.258)||/||(1 - (1593.408 + 44.366) / 4858.168)|
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))|
|=||(13.176 / (13.176 + 44.366))||/||(15.198 / (15.198 + 57.994))|
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)|
|=||(494.158 / 1712.666)||/||(432.64 / 1592.408)|
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 + 1001.372) / 5003.258)||/||((0 + 908.701) / 4858.168)|
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|
|=||(697.497 - 0||-||981.712)||/||5003.258|
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.
Check Point Software Technologies Ltd has a M-score of -2.61 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
Check Point Software Technologies Ltd Annual Data
Check Point Software Technologies Ltd Quarterly Data