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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 * 1.0204||+||0.528 * 0.9985||+||0.404 * 0.9809||+||0.892 * 1.0887||+||0.115 * 0.9629|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0802||+||4.679 * -0.0585||-||0.327 * 1.0897|
|This Year (Mar16) TTM:||Last Year (Mar15) TTM:|
|Accounts Receivable was $247 Mil.|
Revenue was 404.271 + 458.072 + 403.856 + 395.334 = $1,662 Mil.
Gross Profit was 359.262 + 403.352 + 356.452 + 349.731 = $1,469 Mil.
Total Current Assets was $1,666 Mil.
Total Assets was $5,014 Mil.
Property, Plant and Equipment(Net PPE) was $51 Mil.
Depreciation, Depletion and Amortization(DDA) was $15 Mil.
Selling, General & Admin. Expense(SGA) was $468 Mil.
Total Current Liabilities was $1,006 Mil.
Long-Term Debt was $0 Mil.
Net Income was 167.422 + 194.604 + 167.743 + 162.636 = $692 Mil.
Non Operating Income was 0 + 0 + 0 + 0 = $0 Mil.
Cash Flow from Operations was 323.748 + 241.59 + 227.827 + 192.726 = $986 Mil.
|Accounts Receivable was $222 Mil.
Revenue was 372.576 + 420.642 + 370.37 + 362.598 = $1,526 Mil.
Gross Profit was 331.246 + 368.719 + 325.641 + 321.587 = $1,347 Mil.
Total Current Assets was $1,576 Mil.
Total Assets was $4,911 Mil.
Property, Plant and Equipment(Net PPE) was $42 Mil.
Depreciation, Depletion and Amortization(DDA) was $12 Mil.
Selling, General & Admin. Expense(SGA) was $398 Mil.
Total Current Liabilities was $904 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)|
|=||(246.714 / 1661.533)||/||(222.092 / 1526.186)|
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)|
|=||(1347.193 / 1526.186)||/||(1468.797 / 1661.533)|
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 - (1665.602 + 50.728) / 5013.552)||/||(1 - (1576.268 + 41.951) / 4910.589)|
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))|
|=||(11.534 / (11.534 + 41.951))||/||(14.64 / (14.64 + 50.728))|
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)|
|=||(467.785 / 1661.533)||/||(397.764 / 1526.186)|
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 + 1005.959) / 5013.552)||/||((0 + 904.229) / 4910.589)|
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|
|=||(692.405 - 0||-||985.891)||/||5013.552|
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 -2.71 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