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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 4 years, the highest Beneish M-Score of Splunk Inc was 6.71. The lowest was -1.61. And the median was 2.55.
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 * 1.0341||+||0.528 * 1.0392||+||0.404 * 5.147||+||0.892 * 1.4899||+||0.115 * 1.517|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.1157||+||4.679 * -0.2575||-||0.327 * 1.3905|
|This Year (Jan15) TTM:||Last Year (Jan14) TTM:|
|Accounts Receivable was $128.4 Mil.|
Revenue was 147.392 + 116.029 + 101.547 + 85.907 = $450.9 Mil.
Gross Profit was 125.852 + 98.449 + 86.476 + 71.72 = $382.5 Mil.
Total Current Assets was $999.8 Mil.
Total Assets was $1,247.8 Mil.
Property, Plant and Equipment(Net PPE) was $50.4 Mil.
Depreciation, Depletion and Amortization(DDA) was $12.5 Mil.
Selling, General & Admin. Expense(SGA) was $447.5 Mil.
Total Current Liabilities was $346.6 Mil.
Long-Term Debt was $0.0 Mil.
Net Income was -57.028 + -48.551 + -60.782 + -50.755 = $-217.1 Mil.
Non Operating Income was 0.542 + -0.052 + -0.054 + -0.22 = $0.2 Mil.
Cash Flow from Operations was 51.528 + 24.205 + 9.336 + 18.911 = $104.0 Mil.
|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.
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)|
|=||(128.413 / 450.875)||/||(83.348 / 302.623)|
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)|
|=||(98.449 / 302.623)||/||(125.852 / 450.875)|
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 - (999.833 + 50.374) / 1247.791)||/||(1 - (992.82 + 15.505) / 1040.331)|
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))|
|=||(6.692 / (6.692 + 15.505))||/||(12.494 / (12.494 + 50.374))|
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)|
|=||(447.517 / 450.875)||/||(269.21 / 302.623)|
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 + 346.648) / 1247.791)||/||((0 + 207.854) / 1040.331)|
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|
|=||(-217.116 - 0.216||-||103.98)||/||1247.791|
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 -1.61 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