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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 46.85. The lowest was -3.80. 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 * 0.8162||+||0.528 * 1.0263||+||0.404 * 0.7418||+||0.892 * 1.4853||+||0.115 * 1.3081|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9388||+||4.679 * -0.3164||-||0.327 * 1.1861|
|This Year (Apr16) TTM:||Last Year (Apr15) TTM:|
|Accounts Receivable was $98.6 Mil.|
Revenue was 185.952 + 220.024 + 174.42 + 148.326 = $728.7 Mil.
Gross Profit was 146.452 + 184.618 + 143.829 + 123.286 = $598.2 Mil.
Total Current Assets was $1,151.7 Mil.
Total Assets was $1,483.9 Mil.
Property, Plant and Equipment(Net PPE) was $144.7 Mil.
Depreciation, Depletion and Amortization(DDA) was $22.5 Mil.
Selling, General & Admin. Expense(SGA) was $675.3 Mil.
Total Current Liabilities was $465.1 Mil.
Long-Term Debt was $0.0 Mil.
Net Income was -100.896 + -79.323 + -72.974 + -55.289 = $-308.5 Mil.
Non Operating Income was -1.125 + -0.042 + -0.271 + -0.295 = $-1.7 Mil.
Cash Flow from Operations was 35.689 + 77.009 + 36.36 + 13.638 = $162.7 Mil.
|Accounts Receivable was $81.3 Mil.
Revenue was 125.665 + 147.392 + 116.029 + 101.547 = $490.6 Mil.
Gross Profit was 102.58 + 125.852 + 98.449 + 86.476 = $413.4 Mil.
Total Current Assets was $966.4 Mil.
Total Assets was $1,240.0 Mil.
Property, Plant and Equipment(Net PPE) was $62.3 Mil.
Depreciation, Depletion and Amortization(DDA) was $13.3 Mil.
Selling, General & Admin. Expense(SGA) was $484.3 Mil.
Total Current Liabilities was $327.7 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)|
|=||(98.607 / 728.722)||/||(81.341 / 490.633)|
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)|
|=||(413.357 / 490.633)||/||(598.185 / 728.722)|
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 - (1151.697 + 144.655) / 1483.864)||/||(1 - (966.445 + 62.315) / 1239.995)|
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))|
|=||(13.309 / (13.309 + 62.315))||/||(22.486 / (22.486 + 144.655))|
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)|
|=||(675.29 / 728.722)||/||(484.297 / 490.633)|
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 + 465.136) / 1483.864)||/||((0 + 327.704) / 1239.995)|
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|
|=||(-308.482 - -1.733||-||162.696)||/||1483.864|
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 -3.80 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