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LinkedIn Corp (NYSE:LNKD)
Beneish M-Score
-3.00 (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.

LinkedIn Corp has a M-score of -3.00 suggests that the company is not a manipulator.

LNKD' s 10-Year Beneish M-Score Range
Min: -3.01   Max: -2.05
Current: -3

-3.01
-2.05

During the past 6 years, the highest Beneish M-Score of LinkedIn Corp was -2.05. The lowest was -3.01. And the median was -2.60.


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 LinkedIn Corp 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 * 0.9095+0.528 * 1.0014+0.404 * 0.9649+0.892 * 1.4211+0.115 * 1.0916
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0106+4.679 * -0.1161-0.327 * 1.8067
=-3.00

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

This Year (Mar15) TTM:Last Year (Mar14) TTM:
Accounts Receivable was $425 Mil.
Revenue was 637.687 + 643.432 + 568.265 + 533.877 = $2,383 Mil.
Gross Profit was 549.281 + 556.53 + 493.361 + 464.341 = $2,064 Mil.
Total Current Assets was $4,220 Mil.
Total Assets was $5,538 Mil.
Property, Plant and Equipment(Net PPE) was $755 Mil.
Depreciation, Depletion and Amortization(DDA) was $261 Mil.
Selling, General & Admin. Expense(SGA) was $1,202 Mil.
Total Current Liabilities was $878 Mil.
Long-Term Debt was $1,093 Mil.
Net Income was -42.548 + 2.995 + -4.263 + -1.034 = $-45 Mil.
Non Operating Income was -4.035 + -1.731 + -1.262 + -0.132 = $-7 Mil.
Cash Flow from Operations was 165.132 + 130.431 + 181.226 + 128.436 = $605 Mil.
Accounts Receivable was $329 Mil.
Revenue was 473.193 + 447.219 + 392.96 + 363.661 = $1,677 Mil.
Gross Profit was 410.738 + 389.354 + 339.565 + 314.397 = $1,454 Mil.
Total Current Assets was $2,780 Mil.
Total Assets was $3,562 Mil.
Property, Plant and Equipment(Net PPE) was $407 Mil.
Depreciation, Depletion and Amortization(DDA) was $158 Mil.
Selling, General & Admin. Expense(SGA) was $837 Mil.
Total Current Liabilities was $701 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)
=(424.787 / 2383.261) / (328.661 / 1677.033)
=0.17823772 / 0.19597766
=0.9095

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)
=(556.53 / 1677.033) / (549.281 / 2383.261)
=0.86703959 / 0.86583593
=1.0014

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 - (4219.519 + 755.396) / 5538.164) / (1 - (2779.905 + 406.543) / 3561.869)
=0.1017032 / 0.1054
=0.9649

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
=2383.261 / 1677.033
=1.4211

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))
=(158.45 / (158.45 + 406.543)) / (261.178 / (261.178 + 755.396))
=0.28044595 / 0.25691981
=1.0916

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)
=(1201.514 / 2383.261) / (836.605 / 1677.033)
=0.50414705 / 0.49886019
=1.0106

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)
=((1092.715 + 877.742) / 5538.164) / ((0 + 701.428) / 3561.869)
=0.35579607 / 0.19692695
=1.8067

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
=(-44.85 - -7.16 - 605.225) / 5538.164
=-0.1161

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.

LinkedIn Corp has a M-score of -3.00 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.

LinkedIn Corp Annual Data

Dec09Dec10Dec11Dec12Dec13Dec14
DSRI 0.9441.0238
GMI 1.00420.9996
AQI 0.54921.4796
SGI 1.57211.4516
DEPI 1.10531.1186
SGAI 1.05011.028
LVGI 0.63721.8902
TATA -0.1218-0.1072
M-score -2.65-2.65

LinkedIn Corp Quarterly Data

Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14Dec14Mar15
DSRI 1.01730.86760.80690.9441.02211.14831.12981.02380.9095
GMI 0.98070.98780.99461.00421.00481.00210.99961.0014
AQI 2.43010.89220.51270.54920.90450.73471.92641.47960.9649
SGI 1.79751.71851.65581.57211.51281.48491.46041.45161.4211
DEPI 0.96951.03791.15991.10531.05490.95520.9411.11861.0916
SGAI 0.99590.99921.02541.05011.07521.06081.04741.0281.0106
LVGI 1.11811.15220.62970.63720.63490.65241.11951.89021.8067
TATA -0.1768-0.2033-0.1229-0.1218-0.132-0.129-0.137-0.1072-0.1161
M-score -2.05-3.01-2.71-2.65-2.54-2.52-2.27-2.65-3.00
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