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NetSuite Inc (NYSE:N)
Beneish M-Score
-3.49 (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.

NetSuite Inc has a M-score of -3.49 suggests that the company is not a manipulator.

N' s Beneish M-Score Range Over the Past 10 Years
Min: -3.56   Max: 1.33
Current: -3.49

-3.56
1.33

During the past 13 years, the highest Beneish M-Score of NetSuite Inc was 1.33. The lowest was -3.56. And the median was -3.03.


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 NetSuite Inc 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 * 0.8286+0.528 * 1.0286+0.404 * 0.902+0.892 * 1.2955+0.115 * 0.9234
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9423+4.679 * -0.2316-0.327 * 1.0308
=-3.49

* 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 $168.3 Mil.
Revenue was 243.915 + 230.771 + 216.578 + 206.229 = $897.5 Mil.
Gross Profit was 155.423 + 146.666 + 144.726 + 138.399 = $585.2 Mil.
Total Current Assets was $736.3 Mil.
Total Assets was $1,232.5 Mil.
Property, Plant and Equipment(Net PPE) was $99.8 Mil.
Depreciation, Depletion and Amortization(DDA) was $58.3 Mil.
Selling, General & Admin. Expense(SGA) was $545.5 Mil.
Total Current Liabilities was $581.8 Mil.
Long-Term Debt was $285.9 Mil.
Net Income was -34.144 + -37.743 + -29.745 + -32.403 = $-134.0 Mil.
Non Operating Income was -0.135 + 0.307 + 0.158 + -0.003 = $0.3 Mil.
Cash Flow from Operations was 62.022 + 36.653 + 31.314 + 21.054 = $151.0 Mil.
Accounts Receivable was $156.8 Mil.
Revenue was 192.823 + 177.28 + 164.817 + 157.869 = $692.8 Mil.
Gross Profit was 126.727 + 118.139 + 112.456 + 107.332 = $464.7 Mil.
Total Current Assets was $620.6 Mil.
Total Assets was $1,093.3 Mil.
Property, Plant and Equipment(Net PPE) was $82.9 Mil.
Depreciation, Depletion and Amortization(DDA) was $42.8 Mil.
Selling, General & Admin. Expense(SGA) was $446.9 Mil.
Total Current Liabilities was $468.1 Mil.
Long-Term Debt was $278.6 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)
=(168.309 / 897.493) / (156.792 / 692.789)
=0.18753238 / 0.22631999
=0.8286

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)
=(464.654 / 692.789) / (585.214 / 897.493)
=0.6707006 / 0.65205411
=1.0286

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 - (736.349 + 99.801) / 1232.476) / (1 - (620.622 + 82.893) / 1093.27)
=0.32156894 / 0.35650388
=0.902

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
=897.493 / 692.789
=1.2955

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))
=(42.822 / (42.822 + 82.893)) / (58.33 / (58.33 + 99.801))
=0.34062761 / 0.36887138
=0.9234

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)
=(545.469 / 897.493) / (446.859 / 692.789)
=0.60776964 / 0.64501457
=0.9423

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)
=((285.92 + 581.785) / 1232.476) / ((278.598 + 468.118) / 1093.27)
=0.70403399 / 0.68301152
=1.0308

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
=(-134.035 - 0.327 - 151.043) / 1232.476
=-0.2316

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.

NetSuite Inc has a M-score of -3.49 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.

NetSuite Inc Annual Data

Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15
DSRI 0.75791.01560.88470.9111.17351.26930.99731.19490.9527
GMI 0.95491.01111.02750.9740.97241.01391.02480.98781.0199
AQI 0.1738.95611.64190.82760.84090.90061.07181.27761.6701
SGI 1.61511.40481.09221.15981.22351.30681.34221.3421.3323
DEPI 1.11952.11790.73611.09751.03071.02321.1470.93490.9711
SGAI 0.78990.96070.95770.99861.01870.96971.01181.01361.003
LVGI 0.2591.03491.02171.04751.09281.06711.30691.02610.972
TATA -0.1295-0.0278-0.1371-0.2075-0.2427-0.241-0.1712-0.1892-0.1975
M-score -2.831.11-2.90-3.48-3.37-3.13-3.02-2.79-2.86

NetSuite Inc Quarterly Data

Jun14Sep14Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16
DSRI 1.08151.23051.19491.11081.13721.0860.95271.00320.97480.8286
GMI 0.99810.990.98780.99261.00511.0171.01991.02351.02931.0286
AQI 1.08791.67841.27761.22562.31191.54061.67011.7050.93030.902
SGI 1.33351.33531.3421.34161.35031.34941.33231.32561.31511.2955
DEPI 0.91080.9430.93490.98070.99880.9950.97110.94180.88880.9234
SGAI 0.98411.00931.01361.00821.041.01061.0031.00460.95620.9423
LVGI 1.04091.041.02611.04690.95320.97330.9720.96871.05531.0308
TATA -0.1881-0.1917-0.1892-0.2-0.1864-0.1989-0.1975-0.2036-0.2136-0.2316
M-score -2.97-2.62-2.79-2.94-2.37-2.79-2.86-2.84-3.26-3.49
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