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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 7 years, the highest Beneish M-Score of Splunk Inc was 6.71. The lowest was -3.48. And the median was -2.22.
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 Splunk 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 * 0.9542||+||0.528 * 1.023||+||0.404 * 0.7585||+||0.892 * 1.4825||+||0.115 * 1.5752|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9449||+||4.679 * -0.2823||-||0.327 * 1.1659|
|This Year (Jan16) TTM:||Last Year (Jan15) TTM:|
|Accounts Receivable was $181.7 Mil.|
Revenue was 220.024 + 174.42 + 148.326 + 125.665 = $668.4 Mil.
Gross Profit was 184.618 + 143.829 + 123.286 + 102.58 = $554.3 Mil.
Total Current Assets was $1,217.3 Mil.
Total Assets was $1,536.8 Mil.
Property, Plant and Equipment(Net PPE) was $135.0 Mil.
Depreciation, Depletion and Amortization(DDA) was $19.5 Mil.
Selling, General & Admin. Expense(SGA) was $626.9 Mil.
Total Current Liabilities was $497.8 Mil.
Long-Term Debt was $0.0 Mil.
Net Income was -79.323 + -72.974 + -55.289 + -71.186 = $-278.8 Mil.
Non Operating Income was -0.042 + -0.271 + -0.295 + 0.089 = $-0.5 Mil.
Cash Flow from Operations was 77.009 + 36.36 + 13.638 + 28.615 = $155.6 Mil.
|Accounts Receivable was $128.4 Mil.
Revenue was 147.392 + 116.029 + 101.547 + 85.907 = $450.9 Mil.
Gross Profit was 125.852 + 98.449 + 86.476 + 71.72 = $382.5 Mil.
Total Current Assets was $999.8 Mil.
Total Assets was $1,247.8 Mil.
Property, Plant and Equipment(Net PPE) was $50.4 Mil.
Depreciation, Depletion and Amortization(DDA) was $12.5 Mil.
Selling, General & Admin. Expense(SGA) was $447.5 Mil.
Total Current Liabilities was $346.6 Mil.
Long-Term Debt was $0.0 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)|
|=||(181.665 / 668.435)||/||(128.413 / 450.875)|
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)|
|=||(143.829 / 450.875)||/||(184.618 / 668.435)|
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 - (1217.269 + 134.995) / 1536.839)||/||(1 - (999.833 + 50.374) / 1247.791)|
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))|
|=||(12.494 / (12.494 + 50.374))||/||(19.491 / (19.491 + 134.995))|
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)|
|=||(626.927 / 668.435)||/||(447.517 / 450.875)|
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 + 497.766) / 1536.839)||/||((0 + 346.648) / 1247.791)|
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|
|=||(-278.772 - -0.519||-||155.622)||/||1536.839|
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.
Splunk Inc has a M-score of -3.48 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
Splunk Inc Annual Data
Splunk Inc Quarterly Data