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GuruFocus has detected 5 Warning Signs with Check Point Software Technologies Ltd $CHKP.
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Check Point Software Technologies Ltd (NAS:CHKP)
Beneish M-Score
-2.54 (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 -2.54 suggests that the company is not a manipulator.

CHKP' s Beneish M-Score Range Over the Past 10 Years
Min: -2.81   Max: -0.28
Current: -2.54

-2.81
-0.28

During the past 13 years, the highest Beneish M-Score of Check Point Software Technologies Ltd was -0.28. The lowest was -2.81. And the median was -2.47.


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 * 1.0904+0.528 * 1+0.404 * 0.9652+0.892 * 1.0684+0.115 * 1.1589
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0538+4.679 * -0.0379-0.327 * 1.0719
=-2.54

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

This Year (Dec16) TTM:Last Year (Dec15) TTM:
Accounts Receivable was $479 Mil.
Revenue was 486.707 + 427.574 + 422.749 + 404.271 = $1,741 Mil.
Gross Profit was 427.981 + 377.404 + 374.651 + 359.262 = $1,539 Mil.
Total Current Assets was $1,892 Mil.
Total Assets was $5,218 Mil.
Property, Plant and Equipment(Net PPE) was $62 Mil.
Depreciation, Depletion and Amortization(DDA) was $15 Mil.
Selling, General & Admin. Expense(SGA) was $509 Mil.
Total Current Liabilities was $1,166 Mil.
Long-Term Debt was $0 Mil.
Net Income was 221.954 + 169.652 + 165.819 + 167.422 = $725 Mil.
Non Operating Income was 0 + 0 + 0 + 0 = $0 Mil.
Cash Flow from Operations was 182.726 + 213.924 + 202.45 + 323.748 = $923 Mil.
Accounts Receivable was $411 Mil.
Revenue was 458.072 + 403.856 + 395.334 + 372.576 = $1,630 Mil.
Gross Profit was 403.352 + 356.452 + 349.731 + 331.246 = $1,441 Mil.
Total Current Assets was $1,736 Mil.
Total Assets was $5,070 Mil.
Property, Plant and Equipment(Net PPE) was $49 Mil.
Depreciation, Depletion and Amortization(DDA) was $14 Mil.
Selling, General & Admin. Expense(SGA) was $452 Mil.
Total Current Liabilities was $1,057 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)
=(478.507 / 1741.301) / (410.763 / 1629.838)
=0.27479856 / 0.25202689
=1.0904

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)
=(1440.781 / 1629.838) / (1539.298 / 1741.301)
=0.88400258 / 0.88399306
=1

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 - (1892.455 + 61.859) / 5217.636) / (1 - (1735.834 + 48.692) / 5069.88)
=0.62544072 / 0.64801415
=0.9652

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
=1741.301 / 1629.838
=1.0684

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))
=(13.97 / (13.97 + 48.692)) / (14.735 / (14.735 + 61.859))
=0.22294213 / 0.19237799
=1.1589

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)
=(508.656 / 1741.301) / (451.785 / 1629.838)
=0.29211262 / 0.27719626
=1.0538

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 + 1165.858) / 5217.636) / ((0 + 1056.853) / 5069.88)
=0.22344564 / 0.2084572
=1.0719

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
=(724.847 - 0 - 922.848) / 5217.636
=-0.0379

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 -2.54 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 local exchange's currency.

Check Point Software Technologies Ltd Annual Data

Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15Dec16
DSRI 1.11771.12950.98540.84061.11120.97120.97830.90021.0281.0904
GMI 1.05551.00221.03461.00610.99010.97460.99791.00150.99771
AQI 1.40710.99551.13691.00170.94241.01111.16910.97081.00420.9652
SGI 1.27081.10621.14341.18761.13581.07681.03831.0731.08961.0684
DEPI 0.54370.86350.87880.98591.04912.0361.23021.09270.9581.1588
SGAI 1.06310.89310.90570.88830.960.94651.03341.02851.07721.0538
LVGI 1.1390.98611.16131.02071.0041.02761.05960.93721.10591.0719
TATA -0.0402-0.0339-0.0616-0.0652-0.0416-0.0432-0.0324-0.0255-0.0515-0.0379
M-score -2.23-2.42-2.63-2.75-2.47-2.53-2.55-2.61-2.67-2.54

Check Point Software Technologies Ltd Quarterly Data

Sep14Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16Dec16
DSRI 0.7930.90020.89490.91290.92971.0281.02041.03441.08121.0904
GMI 0.99991.00151.0011.00231.00020.99770.99850.99750.99851
AQI 1.01090.96040.98761.0070.9861.0150.98090.98111.02990.9652
SGI 1.0631.0731.07971.08561.0891.08961.08871.08341.07551.0684
DEPI 1.05341.09271.06671.01820.96110.9580.96291.03981.10271.1589
SGAI 1.03491.02851.03711.0441.06381.07721.08021.07471.0621.0538
LVGI 0.85780.93721.06331.09021.1161.10591.08971.09261.071.0719
TATA 0.0141-0.0189-0.0403-0.045-0.0491-0.0515-0.0585-0.0598-0.0568-0.0379
M-score -2.50-2.58-2.72-2.73-2.75-2.66-2.71-2.70-2.61-2.54
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