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Check Point Software Technologies Ltd (NAS:CHKP)
Beneish M-Score
-2.50 (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 -2.50 suggests that the company is not a manipulator.

CHKP' s 10-Year Beneish M-Score Range
Min: -3.53   Max: 49.72
Current: -2.5

-3.53
49.72

During the past 13 years, the highest Beneish M-Score of Check Point Software Technologies Ltd was 49.72. The lowest was -3.53. And the median was -2.52.


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 * 0.793+0.528 * 0.9999+0.404 * 1.0109+0.892 * 1.063+0.115 * 1.0534
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0349+4.679 * 0.0141-0.327 * 0.8578
=-2.50

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

This Year (Sep14) TTM:Last Year (Sep13) TTM:
Accounts Receivable was $216 Mil.
Revenue was 370.37 + 362.598 + 342.206 + 387.075 = $1,462 Mil.
Gross Profit was 325.641 + 321.587 + 303.328 + 340.88 = $1,291 Mil.
Total Current Assets was $1,522 Mil.
Total Assets was $4,766 Mil.
Property, Plant and Equipment(Net PPE) was $39 Mil.
Depreciation, Depletion and Amortization(DDA) was $11 Mil.
Selling, General & Admin. Expense(SGA) was $373 Mil.
Total Current Liabilities was $799 Mil.
Long-Term Debt was $0 Mil.
Net Income was 161.047 + 159.656 + 153.085 + 194.13 = $668 Mil.
Non Operating Income was 0 + 0 + 0 + 0 = $0 Mil.
Cash Flow from Operations was 202.461 + 167.972 + 172.058 + 58.247 = $601 Mil.
Accounts Receivable was $257 Mil.
Revenue was 344.127 + 340.172 + 322.73 + 368.574 = $1,376 Mil.
Gross Profit was 303.998 + 300.859 + 285.733 + 324.146 = $1,215 Mil.
Total Current Assets was $1,576 Mil.
Total Assets was $4,818 Mil.
Property, Plant and Equipment(Net PPE) was $38 Mil.
Depreciation, Depletion and Amortization(DDA) was $11 Mil.
Selling, General & Admin. Expense(SGA) was $339 Mil.
Total Current Liabilities was $941 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)
=(216.351 / 1462.249) / (256.665 / 1375.603)
=0.1479577 / 0.18658363
=0.793

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)
=(321.587 / 1375.603) / (325.641 / 1462.249)
=0.8830571 / 0.88318474
=0.9999

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 - (1522.378 + 39.424) / 4766.125) / (1 - (1575.598 + 38.056) / 4818.178)
=0.67231199 / 0.66509041
=1.0109

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
=1462.249 / 1375.603
=1.063

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))
=(11.485 / (11.485 + 38.056)) / (11.124 / (11.124 + 39.424))
=0.23182818 / 0.22006805
=1.0534

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)
=(373.448 / 1462.249) / (339.473 / 1375.603)
=0.25539289 / 0.24678123
=1.0349

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 + 798.838) / 4766.125) / ((0 + 941.475) / 4818.178)
=0.16760744 / 0.19540063
=0.8578

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
=(667.918 - 0 - 600.738) / 4766.125
=0.0141

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 -2.50 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 1.10761.17791.12421.11771.12950.98540.84061.11120.97120.9783
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 -0.0515-0.0442-0.0424-0.0401-0.0339-0.0616-0.0587-0.0487-0.0432-0.025
M-score -2.23-2.54-2.22-2.23-2.42-2.63-2.72-2.50-2.53-2.52

Check Point Software Technologies Ltd Quarterly Data

Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14
DSRI 1.13521.10790.97121.07311.01391.03080.97830.79620.88390.793
GMI 0.98150.97940.97460.97760.98480.99160.99790.99980.9990.9999
AQI 0.9770.9691.01111.05661.09321.12121.16911.08341.0111.0109
SGI 1.11351.10111.07681.05751.04361.03361.03831.04531.05291.063
DEPI 1.22551.41632.03592.27512.04471.79171.23021.04461.04891.0534
SGAI 0.95930.95110.94650.970.99151.00381.03341.0311.03581.0349
LVGI 1.02781.04391.02761.11811.14741.13661.0640.87430.86120.8578
TATA -0.0444-0.046-0.0477-0.055-0.0643-0.0625-0.0280.00580.01530.0141
M-score -2.46-2.49-2.55-2.49-2.63-2.62-2.53-2.53-2.42-2.50
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