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LinkedIn Corp (NYSE:LNKD)
Beneish M-Score
-3.12 (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 -3.12 suggests that the company is not a manipulator.

LNKD' s Beneish M-Score Range Over the Past 10 Years
Min: -3.12   Max: -1.67
Current: -3.12

-3.12
-1.67

During the past 7 years, the highest Beneish M-Score of LinkedIn Corp was -1.67. The lowest was -3.12. And the median was -2.57.


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 * 0.9065+0.528 * 0.9912+0.404 * 0.8654+0.892 * 1.3039+0.115 * 1.0694
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9167+4.679 * -0.1693-0.327 * 0.9982
=-3.12

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

This Year (Sep16) TTM:Last Year (Sep15) TTM:
Accounts Receivable was $541 Mil.
Revenue was 959.787 + 932.714 + 860.65 + 861.894 = $3,615 Mil.
Gross Profit was 840.015 + 812.188 + 743.122 + 742.896 = $3,138 Mil.
Total Current Assets was $4,103 Mil.
Total Assets was $7,556 Mil.
Property, Plant and Equipment(Net PPE) was $1,508 Mil.
Depreciation, Depletion and Amortization(DDA) was $549 Mil.
Selling, General & Admin. Expense(SGA) was $1,716 Mil.
Total Current Liabilities was $1,260 Mil.
Long-Term Debt was $1,162 Mil.
Net Income was 8.559 + -119.265 + -45.827 + -8.425 = $-165 Mil.
Non Operating Income was -3.55 + -5.601 + -4.19 + -7.035 = $-20 Mil.
Cash Flow from Operations was 373.277 + 332.423 + 252.187 + 176.606 = $1,134 Mil.
Accounts Receivable was $458 Mil.
Revenue was 779.595 + 711.735 + 637.687 + 643.432 = $2,772 Mil.
Gross Profit was 668.227 + 611.649 + 549.281 + 556.53 = $2,386 Mil.
Total Current Assets was $3,813 Mil.
Total Assets was $6,717 Mil.
Property, Plant and Equipment(Net PPE) was $906 Mil.
Depreciation, Depletion and Amortization(DDA) was $362 Mil.
Selling, General & Admin. Expense(SGA) was $1,436 Mil.
Total Current Liabilities was $1,042 Mil.
Long-Term Debt was $1,115 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)
=(541.325 / 3615.045) / (457.975 / 2772.449)
=0.14974226 / 0.16518789
=0.9065

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)
=(2385.687 / 2772.449) / (3138.221 / 3615.045)
=0.86049807 / 0.86810012
=0.9912

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 - (4103.013 + 1508.48) / 7556.412) / (1 - (3812.737 + 906.189) / 6716.71)
=0.25738657 / 0.2974349
=0.8654

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
=3615.045 / 2772.449
=1.3039

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))
=(361.995 / (361.995 + 906.189)) / (549.215 / (549.215 + 1508.48))
=0.28544359 / 0.26690788
=1.0694

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)
=(1716.384 / 3615.045) / (1435.883 / 2772.449)
=0.47478911 / 0.51791142
=0.9167

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)
=((1162.141 + 1260.071) / 7556.412) / ((1115.439 + 1041.534) / 6716.71)
=0.32055055 / 0.32113535
=0.9982

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
=(-164.958 - -20.376 - 1134.493) / 7556.412
=-0.1693

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 -3.12 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.

LinkedIn Corp Annual Data

Dec09Dec10Dec11Dec12Dec13Dec14Dec15
DSRI 0.88990.98180.9441.02380.9963
GMI 0.96630.96911.00420.99961.0089
AQI 0.97143.39550.54921.47962.7837
SGI 2.14811.8621.57211.45161.348
DEPI 0.93910.91081.10531.11860.8457
SGAI 1.1861.01531.05011.0281.0152
LVGI 0.58591.15830.63721.89020.9121
TATA -0.1358-0.177-0.1218-0.1072-0.1354
M-score -2.13-1.67-2.65-2.65-2.07

LinkedIn Corp Quarterly Data

Jun14Sep14Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16
DSRI 1.14831.12981.02380.90950.93390.9690.99631.01730.92970.9065
GMI 1.00210.99961.00141.00591.011.00891.00610.99950.9912
AQI 0.73471.92641.47960.96493.07492.0592.78372.86670.87480.8654
SGI 1.48491.46041.45161.42111.38651.37081.3481.34851.34121.3039
DEPI 0.95520.9411.11861.09161.00060.95440.84570.85560.92011.0694
SGAI 1.06081.04741.0281.01061.04681.03021.01521.00560.92820.9167
LVGI 0.65241.11951.89021.80671.6191.65220.91210.91410.9980.9982
TATA -0.129-0.137-0.1072-0.1161-0.1228-0.1336-0.1354-0.1442-0.1633-0.1693
M-score -2.52-2.27-2.65-3.00-2.14-2.59-2.07-2.06-3.05-3.12
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