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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 6 years, the highest Beneish M-Score of Splunk Inc was 46.85. The lowest was -3.18. And the median was 3.05.
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 * 0.9722||+||0.528 * 1.0275||+||0.404 * 1.6288||+||0.892 * 1.4684||+||0.115 * 1.3478|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.954||+||4.679 * -0.2668||-||0.327 * 1.3094|
|This Year (Jul15) TTM:||Last Year (Jul14) TTM:|
|Accounts Receivable was $99.7 Mil.|
Revenue was 148.326 + 125.665 + 147.392 + 116.029 = $537.4 Mil.
Gross Profit was 123.286 + 102.58 + 125.852 + 98.449 = $450.2 Mil.
Total Current Assets was $977.4 Mil.
Total Assets was $1,313.1 Mil.
Property, Plant and Equipment(Net PPE) was $77.0 Mil.
Depreciation, Depletion and Amortization(DDA) was $14.7 Mil.
Selling, General & Admin. Expense(SGA) was $512.2 Mil.
Total Current Liabilities was $358.1 Mil.
Long-Term Debt was $0.0 Mil.
Net Income was -55.289 + -71.186 + -57.028 + -48.551 = $-232.1 Mil.
Non Operating Income was -0.295 + 0.089 + 0.542 + -0.052 = $0.3 Mil.
Cash Flow from Operations was 13.638 + 28.615 + 51.528 + 24.205 = $118.0 Mil.
|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.
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)|
|=||(99.694 / 537.412)||/||(69.838 / 365.997)|
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)|
|=||(102.58 / 365.997)||/||(123.286 / 537.412)|
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 - (977.38 + 77.013) / 1313.14)||/||(1 - (916.918 + 33.852) / 1081.616)|
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))|
|=||(9.35 / (9.35 + 33.852))||/||(14.732 / (14.732 + 77.013))|
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)|
|=||(512.189 / 537.412)||/||(365.64 / 365.997)|
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 + 358.149) / 1313.14)||/||((0 + 225.301) / 1081.616)|
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|
|=||(-232.054 - 0.284||-||117.986)||/||1313.14|
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 -3.12 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