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Beneish M-Score -0.62 higher than -2.22, which implies that it might have manipulated its financial results.
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 6 years, the highest Beneish M-Score of Splunk Inc was 46.85. The lowest was -0.62. And the median was 7.84.
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 * 1.0155||+||0.528 * 1.0318||+||0.404 * 6.9606||+||0.892 * 1.5055||+||0.115 * 1.3999|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.1983||+||4.679 * -0.2469||-||0.327 * 0.6482|
|This Year (Oct14) TTM:||Last Year (Oct13) TTM:|
|Accounts Receivable was $82.6 Mil.|
Revenue was 116.029 + 101.547 + 85.907 + 99.91 = $403.4 Mil.
Gross Profit was 98.449 + 86.476 + 71.72 + 88.712 = $345.4 Mil.
Total Current Assets was $892.4 Mil.
Total Assets was $1,129.2 Mil.
Property, Plant and Equipment(Net PPE) was $43.2 Mil.
Depreciation, Depletion and Amortization(DDA) was $11.2 Mil.
Selling, General & Admin. Expense(SGA) was $406.8 Mil.
Total Current Liabilities was $254.9 Mil.
Long-Term Debt was $0.0 Mil.
Net Income was -48.551 + -60.782 + -50.755 + -32.631 = $-192.7 Mil.
Non Operating Income was -0.052 + -0.054 + -0.22 + -0.461 = $-0.8 Mil.
Cash Flow from Operations was 24.205 + 9.336 + 18.911 + 34.429 = $86.9 Mil.
|Accounts Receivable was $54.0 Mil.
Revenue was 78.633 + 66.873 + 57.207 + 65.225 = $267.9 Mil.
Gross Profit was 68.108 + 59.452 + 50.526 + 58.59 = $236.7 Mil.
Total Current Assets was $414.6 Mil.
Total Assets was $439.8 Mil.
Property, Plant and Equipment(Net PPE) was $14.4 Mil.
Depreciation, Depletion and Amortization(DDA) was $5.8 Mil.
Selling, General & Admin. Expense(SGA) was $225.5 Mil.
Total Current Liabilities was $153.2 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)|
|=||(82.55 / 403.393)||/||(53.995 / 267.938)|
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)|
|=||(86.476 / 267.938)||/||(98.449 / 403.393)|
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 - (892.433 + 43.236) / 1129.208)||/||(1 - (414.559 + 14.437) / 439.826)|
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))|
|=||(5.817 / (5.817 + 14.437))||/||(11.16 / (11.16 + 43.236))|
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)|
|=||(406.837 / 403.393)||/||(225.503 / 267.938)|
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 + 254.903) / 1129.208)||/||((0 + 153.166) / 439.826)|
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|
|=||(-192.719 - -0.787||-||86.881)||/||1129.208|
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 -0.62 signals that the company is likely to 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