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Beneish M-Score 6.71 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.
Splunk Inc has a M-score of 6.71 signals that the company is a manipulator.
During the past 5 years, the highest Beneish M-Score of Splunk Inc was 6.71. The lowest was 6.71. And the median was 6.71.
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 * 0.8568||+||0.528 * 1.0121||+||0.404 * 24.4149||+||0.892 * 1.5211||+||0.115 * 0.8671|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.1222||+||4.679 * -0.146||-||0.327 * 0.667|
|This Year (Jan14) TTM:||Last Year (Jan13) TTM:|
|Accounts Receivable was $83.3 Mil.|
Revenue was 99.91 + 78.633 + 66.873 + 57.207 = $302.6 Mil.
Gross Profit was 88.712 + 68.108 + 59.452 + 50.526 = $266.8 Mil.
Total Current Assets was $992.8 Mil.
Total Assets was $1,040.3 Mil.
Property, Plant and Equipment(Net PPE) was $15.5 Mil.
Depreciation, Depletion and Amortization(DDA) was $6.7 Mil.
Selling, General & Admin. Expense(SGA) was $269.2 Mil.
Total Current Liabilities was $207.9 Mil.
Long-Term Debt was $0.0 Mil.
Net Income was -32.631 + -16.55 + -13.693 + -16.134 = $-79.0 Mil.
Non Operating Income was -0.461 + -0.283 + -0.082 + -0.094 = $-0.9 Mil.
Cash Flow from Operations was 34.429 + 13.317 + 6.251 + 19.851 = $73.8 Mil.
|Accounts Receivable was $63.9 Mil.
Revenue was 65.225 + 52.045 + 44.483 + 37.191 = $198.9 Mil.
Gross Profit was 58.59 + 46.166 + 39.838 + 32.926 = $177.5 Mil.
Total Current Assets was $376.7 Mil.
Total Assets was $390.4 Mil.
Property, Plant and Equipment(Net PPE) was $13.2 Mil.
Depreciation, Depletion and Amortization(DDA) was $4.7 Mil.
Selling, General & Admin. Expense(SGA) was $157.7 Mil.
Total Current Liabilities was $117.0 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)|
|=||(83.348 / 302.623)||/||(63.948 / 198.944)|
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)|
|=||(68.108 / 198.944)||/||(88.712 / 302.623)|
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 - (992.82 + 15.505) / 1040.331)||/||(1 - (376.748 + 13.205) / 390.445)|
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))|
|=||(4.674 / (4.674 + 13.205))||/||(6.692 / (6.692 + 15.505))|
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)|
|=||(269.21 / 302.623)||/||(157.7 / 198.944)|
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 + 207.854) / 1040.331)||/||((0 + 116.959) / 390.445)|
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|
|=||(-79.008 - -0.92||-||73.848)||/||1040.331|
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 6.71 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