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GuruFocus has detected 5 Warning Signs with Check Point Software Technologies Ltd $CHKP.
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Check Point Software Technologies Ltd (NAS:CHKP)
Beneish M-Score
-2.56 (As of Today)

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.

Check Point Software Technologies Ltd has a M-score of -2.56 suggests that the company is not a manipulator.

CHKP' s Beneish M-Score Range Over the Past 10 Years
Min: -3.25   Max: 49.78
Current: -2.56

-3.25
49.78

During the past 13 years, the highest Beneish M-Score of Check Point Software Technologies Ltd was 49.78. The lowest was -3.25. And the median was -2.52.


Definition

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 Check Point Software Technologies Ltd 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 * 1.0606+0.528 * 1.0004+0.404 * 0.9751+0.892 * 1.0668+0.115 * 1.2211
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0484+4.679 * -0.0405-0.327 * 1.0471
=-2.56

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

This Year (Mar17) TTM:Last Year (Mar16) TTM:
Accounts Receivable was $279 Mil.
Revenue was 435.45 + 486.707 + 427.574 + 422.749 = $1,772 Mil.
Gross Profit was 386.153 + 427.981 + 377.404 + 374.651 = $1,566 Mil.
Total Current Assets was $1,817 Mil.
Total Assets was $5,251 Mil.
Property, Plant and Equipment(Net PPE) was $67 Mil.
Depreciation, Depletion and Amortization(DDA) was $15 Mil.
Selling, General & Admin. Expense(SGA) was $523 Mil.
Total Current Liabilities was $1,103 Mil.
Long-Term Debt was $0 Mil.
Net Income was 182.551 + 221.954 + 169.652 + 165.819 = $740 Mil.
Non Operating Income was 0 + -25.023 + 0 + 0 = $-25 Mil.
Cash Flow from Operations was 355.413 + 206.114 + 213.924 + 202.45 = $978 Mil.
Accounts Receivable was $247 Mil.
Revenue was 404.271 + 458.072 + 403.856 + 395.334 = $1,662 Mil.
Gross Profit was 359.262 + 403.352 + 356.452 + 349.731 = $1,469 Mil.
Total Current Assets was $1,666 Mil.
Total Assets was $5,014 Mil.
Property, Plant and Equipment(Net PPE) was $51 Mil.
Depreciation, Depletion and Amortization(DDA) was $15 Mil.
Selling, General & Admin. Expense(SGA) was $468 Mil.
Total Current Liabilities was $1,006 Mil.
Long-Term Debt was $0 Mil.



1. DSRI = Days Sales in Receivables Index

Measured as the ratio of days’ sales in receivables in year t to year t-1.

A large increase in DSR could be indicative of revenue inflation.

DSRI=(Receivables_t / Revenue_t) / (Receivables_t-1 / Revenue_t-1)
=(279.149 / 1772.48) / (246.714 / 1661.533)
=0.15749063 / 0.14848577
=1.0606

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.

GMI=GrossMargin_t-1 / GrossMargin_t
=(GrossProfit_t-1 / Revenue_t-1) / (GrossProfit_t / Revenue_t)
=(1468.797 / 1661.533) / (1566.189 / 1772.48)
=0.8840011 / 0.88361448
=1.0004

3. AQI = Asset Quality Index

AQI is the ratio of asset quality in year t to year t-1.

Asset quality is measured as the ratio of non-current assets other than plant, property and equipment to total assets.

AQI=(1 - (CurrentAssets_t + PPE_t) / TotalAssets_t) / (1 - (CurrentAssets_t-1 + PPE_t-1) / TotalAssets_t-1)
=(1 - (1816.756 + 66.831) / 5250.911) / (1 - (1665.602 + 50.728) / 5013.552)
=0.64128377 / 0.65766187
=0.9751

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.

SGI=Sales_t / Sales_t-1
=Revenue_t / Revenue_t-1
=1772.48 / 1661.533
=1.0668

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))
=(14.64 / (14.64 + 50.728)) / (15.01 / (15.01 + 66.831))
=0.2239628 / 0.18340441
=1.2211

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)
=(523.18 / 1772.48) / (467.785 / 1661.533)
=0.29516835 / 0.28153819
=1.0484

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 + 1103.185) / 5250.911) / ((0 + 1005.959) / 5013.552)
=0.21009402 / 0.20064796
=1.0471

8. TATA = Total Accruals to Total Assets

Total accruals calculated as the change in working capital accounts other than cash less depreciation.

TATA=(IncomefromContinuingOperations_t - CashFlowsfromOperations_t) / TotalAssets_t
=(NetIncome_t - NonOperatingIncome_t - CashFlowsfromOperations_t) / TotalAssets_t
=(739.976 - -25.023 - 977.901) / 5250.911
=-0.0405

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.

Check Point Software Technologies Ltd has a M-score of -2.56 suggests that the company will not be a manipulator.


Related Terms

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


Historical Data

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

Check Point Software Technologies Ltd Annual Data

Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15Dec16
DSRI 1.11771.12950.98540.84061.11120.97120.97830.90021.0281.0904
GMI 1.05551.02071.01591.00610.99010.97460.99791.00150.99771
AQI 1.40710.99551.13691.00170.94241.01111.16910.96041.0150.9652
SGI 1.27081.10621.14341.18761.13581.07681.03831.0731.08961.0684
DEPI 0.54370.86350.87880.98591.04912.03591.23021.09270.9581.1589
SGAI 1.06310.89310.90570.88830.960.94651.03341.02851.07721.0538
LVGI 1.1390.98611.16131.02071.0041.02761.05960.93721.10591.0719
TATA -0.0402-0.0339-0.0697-0.0652-0.0416-0.0454-0.028-0.0189-0.0448-0.0377
M-score -2.23-2.41-2.68-2.75-2.47-2.54-2.53-2.58-2.63-2.54

Check Point Software Technologies Ltd Quarterly Data

Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16Dec16Mar17
DSRI 0.90020.89490.91290.92971.0281.02041.03441.08121.09041.0606
GMI 1.00151.0011.00231.00020.99770.99850.99750.998511.0004
AQI 0.96040.98761.0070.9861.0150.98090.98111.02990.96520.9751
SGI 1.0731.07971.08561.0891.08961.08871.08341.07551.06841.0668
DEPI 1.09271.06671.01820.96110.9580.96291.03981.10271.15891.2211
SGAI 1.02851.03711.0441.06381.07721.08021.07471.0621.05381.0484
LVGI 0.93721.06331.09021.1161.10591.08971.09261.071.07191.0471
TATA -0.0189-0.0403-0.045-0.0491-0.0448-0.0519-0.0532-0.0501-0.0377-0.0405
M-score -2.58-2.72-2.73-2.75-2.63-2.68-2.67-2.58-2.54-2.56
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