Fortinet (STU:FO8) Beneish M-Score : -2.63 (As of Dec. 13, 2024)

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What is Fortinet Beneish M-Score?

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.

Good Sign:

Beneish M-Score -2.63 no higher than -1.78, which implies that the company is unlikely to be a manipulator.

The historical rank and industry rank for Fortinet's Beneish M-Score or its related term are showing as below:

STU:FO8' s Beneish M-Score Range Over the Past 10 Years
Min: -3.71 Med: -2.91 Max: -2.46
Current: -2.63

During the past 13 years, the highest Beneish M-Score of Fortinet was -2.46. The lowest was -3.71. And the median was -2.91.

Fortinet Beneish M-Score Historical Data

The historical data trend for Fortinet's Beneish M-Score can be seen below:

* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD.
* For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.

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Fortinet Beneish M-Score Chart

Fortinet Annual Data

Trend

Dec14

Dec15

Dec16

Dec17

Dec18

Dec19

Dec20

Dec21

Dec22

Dec23

Beneish M-Score

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-2.80

-2.91

-2.95

-2.75

-2.87

Fortinet Quarterly Data
	Dec19	Mar20	Jun20	Sep20	Dec20	Mar21	Jun21	Sep21	Dec21	Mar22	Jun22	Sep22	Dec22	Mar23	Jun23	Sep23	Dec23	Mar24	Jun24	Sep24
Beneish M-Score	Get a 7-Day Free Trial															-3.12	-2.87	-3.03	-2.76	-2.63

Competitive Comparison of Fortinet's Beneish M-Score

For the Software - Infrastructure subindustry, Fortinet's Beneish M-Score, along with its competitors' market caps and Beneish M-Score data, can be viewed below:

* Competitive companies are chosen from companies within the same industry, with headquarter located in same country, with closest market capitalization; x-axis shows the market cap, and y-axis shows the term value; the bigger the dot, the larger the market cap. Note that "N/A" values will not show up in the chart.

Fortinet's Beneish M-Score Distribution in the Software Industry

For the Software industry and Technology sector, Fortinet's Beneish M-Score distribution charts can be found below:

* The bar in red indicates where Fortinet's Beneish M-Score falls into.

Fortinet Beneish M-Score Calculation

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 Fortinet for today is based on a combination of the following eight different indices:

-4.84

0.92 * DSRI

0.528 * GMI

0.404 * AQI

0.892 * SGI

0.115 * DEPI

-4.84

0.92 * 0.9146

0.528 * 0.9592

0.404 * 1.1799

0.892 * 1.0828

0.115 * 1.1158

0.172 * SGAI

4.679 * TATA

0.327 * LVGI

0.172 * 0.9517

4.679 * -0.064197

0.327 * 0.8881

-2.68

This Year (Sep24) TTM:

Last Year (Sep23) TTM:

Total Receivables was €941 Mil.
Revenue was 1358.798 + 1332.465 + 1245.036 + 1297.647 = €5,234 Mil.
Gross Profit was 1121.475 + 1076.99 + 964.712 + 1007.966 = €4,171 Mil.
Total Current Assets was €4,704 Mil.
Total Assets was €7,976 Mil.
Property, Plant and Equipment(Net PPE) was €1,147 Mil.
Depreciation, Depletion and Amortization(DDA) was €108 Mil.
Selling, General, & Admin. Expense(SGA) was €2,075 Mil.
Total Current Liabilities was €3,499 Mil.
Long-Term Debt & Capital Lease Obligation was €895 Mil.
Net Income was 486.45 + 352.834 + 275.356 + 285.095 = €1,400 Mil.
Non Operating Income was 106.408 + -2.044 + -2.668 + 4.677 = €106 Mil.
Cash Flow from Operations was 547.898 + 317.718 + 763.968 + 175.789 = €1,805 Mil.

Total Receivables was €950 Mil.
Revenue was 1250.52 + 1193.254 + 1178.988 + 1211.152 = €4,834 Mil.
Gross Profit was 952.835 + 920.231 + 891.503 + 930.501 = €3,695 Mil.
Total Current Assets was €4,453 Mil.
Total Assets was €7,008 Mil.
Property, Plant and Equipment(Net PPE) was €973 Mil.
Depreciation, Depletion and Amortization(DDA) was €103 Mil.
Selling, General, & Admin. Expense(SGA) was €2,013 Mil.
Total Current Liabilities was €3,419 Mil.
Long-Term Debt & Capital Lease Obligation was €929 Mil.

1. DSRI = Days Sales in Receivables Index

Measured as the ratio of Revenue in Total 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)
	=	(940.734 / 5233.946)	/	(949.931 / 4833.914)
	=	0.179737	/	0.196514
	=	0.9146

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)
	=	(3695.07 / 4833.914)	/	(4171.143 / 5233.946)
	=	0.764405	/	0.79694
	=	0.9592

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 - (4703.761 + 1147.333) / 7975.652)	/	(1 - (4453.28 + 972.606) / 7008.104)
	=	0.26638	/	0.22577
	=	1.1799

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
	=	5233.946	/	4833.914
	=	1.0828

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))
	=	(103.263 / (103.263 + 972.606))	/	(107.982 / (107.982 + 1147.333))
	=	0.095981	/	0.08602
	=	1.1158

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)
	=	(2074.589 / 5233.946)	/	(2013.221 / 4833.914)
	=	0.396372	/	0.416478
	=	0.9517

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)
	=	((895.414 + 3499.394) / 7975.652)	/	((929.317 + 3419.113) / 7008.104)
	=	0.551028	/	0.620486
	=	0.8881

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
	=	(1399.735 - 106.373	-	1805.373)	/	7975.652
	=	-0.064197

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.

Fortinet has a M-score of -2.68 suggests that the company is unlikely to be a manipulator.

Fortinet Beneish M-Score Related Terms

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Fortinet Business Description

Industry

GURUFOCUS.COM » STOCK LIST » Technology » Software » Fortinet Inc (STU:FO8) » Definitions » Beneish M-Score

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Traded in Other Exchanges

FTNT:USA FTNT:Mexico 0IR9:UK FO8:Germany F1TN34:Brazil

Address

909 Kifer Road, Sunnyvale, CA, USA, 94086

Website

https://www.fortinet.com

Fortinet is a platform-based cybersecurity vendor with product offerings covering network security, cloud security, zero-trust access, and security operations. The firm derives a majority of its revenue through sales of its subscriptions and support-based business. The California-based firm has more than 700,000 customers across the world.

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