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Check Point Software Technologies Ltd (NAS:CHKP)
Beneish M-Score
-2.55 (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.

Check Point Software Technologies Ltd has a M-score of -2.55 suggests that the company is not a manipulator.

CHKP' s 10-Year Beneish M-Score Range
Min: -2.82   Max: -2.2
Current: -2.55

-2.82
-2.2

During the past 13 years, the highest Beneish M-Score of Check Point Software Technologies Ltd was -2.20. The lowest was -2.82. And the median was -2.55.


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 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 * 0.9783+0.528 * 0.9979+0.404 * 1.1691+0.892 * 1.0383+0.115 * 1.2302
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0334+4.679 * -0.0317-0.327 * 1.064
=-2.55

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.

This Year (Dec13) TTM:Last Year (Dec12) TTM:
Accounts Receivable was $380 Mil.
Revenue was 387.075 + 344.127 + 340.172 + 322.73 = $1,394 Mil.
Gross Profit was 340.88 + 303.998 + 300.859 + 285.733 = $1,231 Mil.
Total Current Assets was $1,600 Mil.
Total Assets was $4,886 Mil.
Property, Plant and Equipment(Net PPE) was $38 Mil.
Depreciation, Depletion and Amortization(DDA) was $12 Mil.
Selling, General & Admin. Expense(SGA) was $349 Mil.
Total Current Liabilities was $987 Mil.
Long-Term Debt was $0 Mil.
Net Income was 194.13 + 159.701 + 151.008 + 147.96 = $653 Mil.
Non Operating Income was 0 + 9.098 + 0 + 8.842 = $18 Mil.
Cash Flow from Operations was 58.247 + 195.478 + 204.659 + 331.442 = $790 Mil.
Accounts Receivable was $374 Mil.
Revenue was 368.574 + 332.356 + 328.649 + 313.116 = $1,343 Mil.
Gross Profit was 324.146 + 294.076 + 290.697 + 274.615 = $1,184 Mil.
Total Current Assets was $1,924 Mil.
Total Assets was $4,545 Mil.
Property, Plant and Equipment(Net PPE) was $37 Mil.
Depreciation, Depletion and Amortization(DDA) was $15 Mil.
Selling, General & Admin. Expense(SGA) was $325 Mil.
Total Current Liabilities was $863 Mil.
Long-Term Debt was $0 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)
=(379.648 / 1394.104) / (373.755 / 1342.695)
=0.27232402 / 0.2783618
=0.9783

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)
=(303.998 / 1342.695) / (340.88 / 1394.104)
=0.88146154 / 0.88334156
=0.9979

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 - (1600.318 + 37.991) / 4886.437) / (1 - (1923.791 + 36.973) / 4544.885)
=0.66472319 / 0.56857786
=1.1691

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
=1394.104 / 1342.695
=1.0383

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))
=(14.89 / (14.89 + 36.973)) / (11.565 / (11.565 + 37.991))
=0.28710256 / 0.23337235
=1.2302

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)
=(348.802 / 1394.104) / (325.088 / 1342.695)
=0.25019798 / 0.24211604
=1.0334

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 + 986.854) / 4886.437) / ((0 + 862.648) / 4544.885)
=0.20195779 / 0.18980634
=1.064

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
=(652.799 - 17.94 - 789.826) / 4886.437
=-0.0317

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 -2.55 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 own currency.

Check Point Software Technologies Ltd Annual Data

Dec04Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13
DSRI 1.05830.97051.12421.11771.12950.98540.84061.11120.97120.9783
GMI 1.01070.99871.01131.05551.00221.03461.00610.99010.97460.9979
AQI 1.57570.64781.32461.40710.99551.13691.00170.94241.01111.1691
SGI 1.19141.12420.99271.27081.10621.14341.18761.13581.07681.0383
DEPI 0.98961.03772.97490.54370.86350.87880.98591.04912.0361.2302
SGAI 1.05090.921.21311.06310.89310.90570.88830.960.94651.0334
LVGI 1.01671.00840.93931.1390.98611.16131.02071.0041.02761.064
TATA -0.0515-0.0442-0.0424-0.0401-0.0339-0.0616-0.0652-0.0487-0.0432-0.025
M-score -2.27-2.73-2.22-2.23-2.42-2.63-2.75-2.50-2.53-2.52

Check Point Software Technologies Ltd Quarterly Data

Sep11Dec11Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13
DSRI 1.03681.11121.08421.13521.10790.97121.07311.01391.03080.9783
GMI 0.99090.99010.98740.98150.97940.97460.97760.98480.99160.9979
AQI 0.95390.94240.94230.9770.9691.01111.05661.09321.12121.1691
SGI 1.14951.13581.12761.11351.10111.07681.05751.04361.03361.0383
DEPI 1.04621.04911.10641.22551.41632.03592.27512.04471.79171.2302
SGAI 0.94030.960.95970.95930.95110.94650.970.99151.00381.0334
LVGI 0.9841.0041.041.02781.04391.02761.11811.14741.13661.064
TATA -0.0478-0.0435-0.0547-0.0444-0.046-0.0477-0.0569-0.0662-0.0663-0.0317
M-score -2.54-2.48-2.57-2.46-2.49-2.55-2.50-2.64-2.64-2.55
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