Market Cap : 8.76 B | Enterprise Value : 8.41 B | P/E (TTM) : | P/B : 16.43 |
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The zones of discrimination for M-Score is as such:
An M-Score of equal or less than -1.78 suggests that the company is unlikely to be a manipulator.
An M-Score of greater than -1.78 signals that the company is likely to be a manipulator.
Warning Sign:
Beneish M-Score -1.73 higher than -1.78, which implies that the company might have manipulated its financial results.
During the past 5 years, the highest Beneish M-Score of Smartsheet was -1.73. The lowest was -2.65. And the median was -2.41.
* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.
* The bar in red indicates where Smartsheet's Beneish M-Score falls into.
The M-score was created by Professor Messod Beneish. Instead of measuring the bankruptcy risk (Altman Z-Score) or business trend (Piotroski 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 Smartsheet 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 * 1.066 | + | 0.528 * 1.032 | + | 0.404 * 2.9705 | + | 0.892 * 1.4484 | + | 0.115 * 0.8376 | |
- | 0.172 * SGAI | + | 4.679 * TATA | - | 0.327 * LVGI | |||||||
- | 0.172 * 0.9795 | + | 4.679 * -0.1001 | - | 0.327 * 1.1135 | |||||||
= | -1.73 |
* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.
This Year (Oct20) TTM: | Last Year (Oct19) TTM: |
Accounts Receivable was $65.8 Mil. Revenue was 98.933 + 91.222 + 85.487 + 78.519 = $354.2 Mil. Gross Profit was 75.203 + 72.204 + 67.046 + 62.867 = $277.3 Mil. Total Current Assets was $498.8 Mil. Total Assets was $831.5 Mil. Property, Plant and Equipment(Net PPE) was $91.2 Mil. Depreciation, Depletion and Amortization(DDA) was $16.1 Mil. Selling, General, & Admin. Expense(SGA) was $284.4 Mil. Total Current Liabilities was $242.4 Mil. Long-Term Debt & Capital Lease Obligation was $52.7 Mil. Net Income was -31.971 + -26.559 + -27.784 + -28.16 = $-114.5 Mil. Non Operating Income was -0.025 + 0.134 + -0.214 + -0.219 = $-0.3 Mil. Cash Flow from Operations was -5.249 + -1.318 + -24.285 + -0.042 = $-30.9 Mil. |
Accounts Receivable was $42.6 Mil. Revenue was 71.525 + 64.644 + 56.194 + 52.151 = $244.5 Mil. Gross Profit was 57.427 + 51.979 + 45.709 + 42.484 = $197.6 Mil. Total Current Assets was $615.4 Mil. Total Assets was $774.8 Mil. Property, Plant and Equipment(Net PPE) was $83.7 Mil. Depreciation, Depletion and Amortization(DDA) was $12.0 Mil. Selling, General, & Admin. Expense(SGA) was $200.5 Mil. Total Current Liabilities was $196.1 Mil. Long-Term Debt & Capital Lease Obligation was $50.8 Mil. |
1. DSRI = Days Sales in Receivables Index
Measured as the ratio of Revenue in Accounts Receivable 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) |
= | (65.827 / 354.161) | / | (42.634 / 244.514) | |
= | 0.18586744 | / | 0.1743622 | |
= | 1.066 |
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) | |
= | (197.599 / 244.514) | / | (277.32 / 354.161) | |
= | 0.8081296 | / | 0.78303371 | |
= | 1.032 |
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 Property, Plant and Equipment to Total Assets.
AQI | = | (1 - (CurrentAssets_t + PPE_t) / TotalAssets_t) | / | (1 - (CurrentAssets_t-1 + PPE_t-1) / TotalAssets_t-1) |
= | (1 - (498.797 + 91.207) / 831.529) | / | (1 - (615.36 + 83.659) / 774.777) | |
= | 0.2904589 | / | 0.09778039 | |
= | 2.9705 |
4. SGI = Sales Growth Index
Ratio of Revenue 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 | |
= | 354.161 | / | 244.514 | |
= | 1.4484 |
5. DEPI = Depreciation Index
Measured as the ratio of the rate of Depreciation, Depletion and Amortization 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)) |
= | (12.032 / (12.032 + 83.659)) | / | (16.111 / (16.111 + 91.207)) | |
= | 0.12573805 | / | 0.15012393 | |
= | 0.8376 |
Note: If the Depreciation, Depletion and Amortization data is not available, we assume that the depreciation rate is constant and set the Depreciation Index to 1.
6. SGAI = Sales, General and Administrative expenses Index
The ratio of Selling, General, & Admin. Expense(SGA) to Sales 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) |
= | (284.421 / 354.161) | / | (200.477 / 244.514) | |
= | 0.80308391 | / | 0.81989988 | |
= | 0.9795 |
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 in leverage
LVGI | = | ((LTD_t + CurrentLiabilities_t) / TotalAssets_t) | / | ((LTD_t-1 + CurrentLiabilities_t-1) / TotalAssets_t-1) |
= | ((52.727 + 242.353) / 831.529) | / | ((50.824 + 196.099) / 774.777) | |
= | 0.35486435 | / | 0.31870203 | |
= | 1.1135 |
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 | |
= | (-114.474 - -0.324 | - | -30.894) | / | 831.529 | |
= | -0.1001 |
An M-Score of equal or less than -1.78 suggests that the company is unlikely to be a manipulator. An M-Score of greater than -1.78 signals that the company is likely to be a manipulator.
Smartsheet has a M-score of -1.73 signals that the company is likely to be a manipulator.
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