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Beneish M-Score 46.85 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 46.85 signals that the company is a manipulator.
During the past 5 years, the highest Beneish M-Score of Splunk Inc was 46.85. The lowest was 6.71. And the median was 22.73.
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 * 1.1303||+||0.528 * 1.0337||+||0.404 * 123.8738||+||0.892 * 1.5165||+||0.115 * 1.2967|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.2055||+||4.679 * -0.2179||-||0.327 * 0.6472|
|This Year (Jul14) TTM:||Last Year (Jul13) TTM:|
|Accounts Receivable was $69.8 Mil.|
Revenue was 101.547 + 85.907 + 99.91 + 78.633 = $366.0 Mil.
Gross Profit was 86.476 + 71.72 + 88.712 + 68.108 = $315.0 Mil.
Total Current Assets was $916.9 Mil.
Total Assets was $1,081.6 Mil.
Property, Plant and Equipment(Net PPE) was $33.9 Mil.
Depreciation, Depletion and Amortization(DDA) was $9.4 Mil.
Selling, General & Admin. Expense(SGA) was $365.6 Mil.
Total Current Liabilities was $225.3 Mil.
Long-Term Debt was $0.0 Mil.
Net Income was -60.782 + -50.755 + -32.631 + -16.55 = $-160.7 Mil.
Non Operating Income was -0.054 + -0.22 + -0.461 + -0.283 = $-1.0 Mil.
Cash Flow from Operations was 9.336 + 18.911 + 34.429 + 13.317 = $76.0 Mil.
|Accounts Receivable was $40.7 Mil.
Revenue was 66.873 + 57.207 + 65.225 + 52.045 = $241.4 Mil.
Gross Profit was 59.452 + 50.526 + 58.59 + 46.166 = $214.7 Mil.
Total Current Assets was $398.4 Mil.
Total Assets was $412.7 Mil.
Property, Plant and Equipment(Net PPE) was $13.9 Mil.
Depreciation, Depletion and Amortization(DDA) was $5.4 Mil.
Selling, General & Admin. Expense(SGA) was $200.0 Mil.
Total Current Liabilities was $132.8 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)|
|=||(69.838 / 365.997)||/||(40.746 / 241.35)|
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)|
|=||(71.72 / 241.35)||/||(86.476 / 365.997)|
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 - (916.918 + 33.852) / 1081.616)||/||(1 - (398.407 + 13.855) / 412.665)|
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))|
|=||(5.405 / (5.405 + 13.855))||/||(9.35 / (9.35 + 33.852))|
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)|
|=||(365.64 / 365.997)||/||(200.006 / 241.35)|
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 + 225.301) / 1081.616)||/||((0 + 132.825) / 412.665)|
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|
|=||(-160.718 - -1.018||-||75.993)||/||1081.616|
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 46.85 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