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Adobe Systems Inc (NAS:ADBE)
Beneish M-Score
-2.84 (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.

Adobe Systems Inc has a M-score of -2.84 suggests that the company is not a manipulator.

ADBE' s 10-Year Beneish M-Score Range
Min: -4.18   Max: -0.68
Current: -2.84

-4.18
-0.68

During the past 13 years, the highest Beneish M-Score of Adobe Systems Inc was -0.68. The lowest was -4.18. And the median was -2.90.


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 Adobe Systems 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 * 0.9918+0.528 * 1.0089+0.404 * 1.0295+0.892 * 1.0515+0.115 * 1.1536
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9622+4.679 * -0.0831-0.327 * 1.1414
=-2.84

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.

This Year (Feb15) TTM:Last Year (Feb14) TTM:
Accounts Receivable was $532 Mil.
Revenue was 1109.181 + 1073.328 + 1005.409 + 1068.208 = $4,256 Mil.
Gross Profit was 942.383 + 912.385 + 847.685 + 913.304 = $3,616 Mil.
Total Current Assets was $3,972 Mil.
Total Assets was $11,008 Mil.
Property, Plant and Equipment(Net PPE) was $784 Mil.
Depreciation, Depletion and Amortization(DDA) was $316 Mil.
Selling, General & Admin. Expense(SGA) was $2,184 Mil.
Total Current Liabilities was $1,788 Mil.
Long-Term Debt was $1,902 Mil.
Net Income was 84.888 + 88.136 + 44.686 + 88.527 = $306 Mil.
Non Operating Income was -1.52 + 8.83 + -3.151 + -2.124 = $2 Mil.
Cash Flow from Operations was 183.015 + 399.753 + 268.52 + 367.536 = $1,219 Mil.
Accounts Receivable was $511 Mil.
Revenue was 1000.12 + 1041.699 + 995.119 + 1010.549 = $4,047 Mil.
Gross Profit was 851.611 + 894.183 + 848.043 + 875.268 = $3,469 Mil.
Total Current Assets was $3,942 Mil.
Total Assets was $10,246 Mil.
Property, Plant and Equipment(Net PPE) was $651 Mil.
Depreciation, Depletion and Amortization(DDA) was $322 Mil.
Selling, General & Admin. Expense(SGA) was $2,159 Mil.
Total Current Liabilities was $2,112 Mil.
Long-Term Debt was $896 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)
=(532.427 / 4256.126) / (510.507 / 4047.487)
=0.12509663 / 0.12612937
=0.9918

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)
=(912.385 / 4047.487) / (942.383 / 4256.126)
=0.85710096 / 0.84954181
=1.0089

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 - (3972.159 + 784.314) / 11008.422) / (1 - (3942.391 + 651.083) / 10245.882)
=0.56792418 / 0.55167608
=1.0295

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
=4256.126 / 4047.487
=1.0515

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))
=(322.111 / (322.111 + 651.083)) / (315.589 / (315.589 + 784.314))
=0.33098334 / 0.28692439
=1.1536

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)
=(2184.337 / 4256.126) / (2158.817 / 4047.487)
=0.51322188 / 0.53337219
=0.9622

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)
=((1901.554 + 1788.16) / 11008.422) / ((896.418 + 2112.347) / 10245.882)
=0.33517193 / 0.29365603
=1.1414

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
=(306.237 - 2.035 - 1218.824) / 11008.422
=-0.0831

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.

Adobe Systems Inc has a M-score of -2.84 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 own currency.

Adobe Systems Inc Annual Data

Nov05Nov06Nov07Nov08Nov09Nov10Nov11Nov12Nov13Nov14
DSRI 1.03451.57260.72711.29551.06871.04591.03140.93161.05530.9648
GMI 0.99431.06350.99860.98770.99941.00610.99741.00671.04071.0063
AQI 0.85543.55531.04360.95481.27420.90580.94910.95031.10240.9156
SGI 1.17991.30971.22621.13360.82291.28991.10951.04450.92091.0226
DEPI 1.01510.77211.10381.1251.10011.0671.16581.08890.94961.1473
SGAI 0.97731.10740.93180.99931.09090.98530.99691.03761.19141.003
LVGI 0.85420.57711.31331.2811.32531.2520.96650.89971.05681.0835
TATA -0.0632-0.081-0.1247-0.0731-0.0976-0.0397-0.0766-0.0646-0.0826-0.0946
M-score -2.59-0.90-3.17-2.53-3.03-2.47-2.70-2.79-2.88-2.98

Adobe Systems Inc Quarterly Data

Nov12Feb13May13Aug13Nov13Feb14May14Aug14Nov14Feb15
DSRI 0.93160.91960.90520.9741.05531.13361.17141.0240.96480.9918
GMI 1.00671.02091.02291.03171.04071.02451.02281.01471.00631.0089
AQI 0.95030.90360.92111.07041.10241.09821.09630.93070.91561.0295
SGI 1.04451.03130.98090.94650.92090.9270.96540.98761.02261.0515
DEPI 1.08891.07611.0210.98960.94960.93330.97881.13321.14731.1536
SGAI 1.03761.06881.10621.14371.19141.15271.10941.081.0030.9622
LVGI 0.89970.95170.9190.9981.05681.07641.11431.0841.08351.1414
TATA -0.0653-0.0775-0.0749-0.082-0.0826-0.0787-0.0838-0.0918-0.0946-0.0831
M-score -2.79-2.90-2.94-2.92-2.88-2.80-2.75-2.94-2.98-2.84
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