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Adobe Systems Inc (NAS:ADBE)
Beneish M-Score
-2.79 (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 -2.79 suggests that the company is not a manipulator.

ADBE' s Beneish M-Score Range Over the Past 10 Years
Min: -4.18   Max: -0.9
Current: -2.79

-4.18
-0.9

During the past 13 years, the highest Beneish M-Score of Adobe Systems Inc was -0.90. The lowest was -4.18. And the median was -2.77.


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 * 0.9897+0.528 * 1.0066+0.404 * 1.0389+0.892 * 1.1351+0.115 * 0.9789
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.8737+4.679 * -0.0868-0.327 * 1.1494
=-2.79

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

This Year (Aug15) TTM:Last Year (Aug14) TTM:
Accounts Receivable was $594 Mil.
Revenue was 1217.768 + 1162.158 + 1109.181 + 0 = $3,489 Mil.
Gross Profit was 1026.783 + 976.985 + 942.383 + 0 = $2,946 Mil.
Total Current Assets was $4,526 Mil.
Total Assets was $11,508 Mil.
Property, Plant and Equipment(Net PPE) was $797 Mil.
Depreciation, Depletion and Amortization(DDA) was $331 Mil.
Selling, General & Admin. Expense(SGA) was $1,640 Mil.
Total Current Liabilities was $2,061 Mil.
Long-Term Debt was $1,906 Mil.
Net Income was 174.465 + 147.493 + 84.888 + 0 = $407 Mil.
Non Operating Income was -4.275 + -2.884 + -1.52 + 0 = $-9 Mil.
Cash Flow from Operations was 360.488 + 471.484 + 183.015 + 399.753 = $1,415 Mil.
Accounts Receivable was $528 Mil.
Revenue was 1005.409 + 1068.208 + 1000.12 + 0 = $3,074 Mil.
Gross Profit was 847.685 + 913.304 + 851.611 + 0 = $2,613 Mil.
Total Current Assets was $4,279 Mil.
Total Assets was $10,494 Mil.
Property, Plant and Equipment(Net PPE) was $786 Mil.
Depreciation, Depletion and Amortization(DDA) was $317 Mil.
Selling, General & Admin. Expense(SGA) was $1,653 Mil.
Total Current Liabilities was $2,245 Mil.
Long-Term Debt was $902 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)
=(593.554 / 3489.107) / (528.331 / 3073.737)
=0.17011631 / 0.17188556
=0.9897

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)
=(976.985 / 3073.737) / (1026.783 / 3489.107)
=0.84997513 / 0.8443854
=1.0066

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 - (4525.888 + 797.464) / 11508.395) / (1 - (4279.468 + 785.856) / 10493.68)
=0.5374375 / 0.51729765
=1.0389

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
=3489.107 / 3073.737
=1.1351

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))
=(316.793 / (316.793 + 785.856)) / (331.261 / (331.261 + 797.464))
=0.28730176 / 0.29348247
=0.9789

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)
=(1639.637 / 3489.107) / (1653.244 / 3073.737)
=0.46993027 / 0.53786124
=0.8737

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)
=((1906.094 + 2060.814) / 11508.395) / ((901.83 + 2245.248) / 10493.68)
=0.34469689 / 0.29990223
=1.1494

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
=(406.846 - -8.679 - 1414.74) / 11508.395
=-0.0868

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 -2.79 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

Nov06Nov07Nov08Nov09Nov10Nov11Nov12Nov13Nov14Nov15
DSRI 1.57260.72711.29551.06871.04591.03140.93161.05530.96480.982
GMI 1.06350.99860.98770.99941.00610.99741.00671.04071.00631.0062
AQI 3.55531.04360.95481.27420.90580.94910.95031.10240.91561.0423
SGI 1.30971.22621.13360.82291.28991.10951.04450.92091.02261.1564
DEPI 0.77211.10381.1251.10011.0671.16581.08890.94961.14730.9474
SGAI 1.10740.93180.99931.09090.98530.99691.03761.19141.0030.8725
LVGI 0.57711.31331.2811.32531.2520.96650.89971.05681.08351.113
TATA -0.081-0.1247-0.0731-0.0976-0.0397-0.0766-0.0646-0.0826-0.0933-0.0721
M-score -0.90-3.17-2.53-3.03-2.47-2.70-2.79-2.88-2.97-2.70

Adobe Systems Inc Quarterly Data

Aug13Nov13Feb14May14Aug14Nov14Feb15May15Aug15Nov15
DSRI 0.99431.04811.12331.1440.99150.96730.98490.8840.98970.7278
GMI 1.04131.04131.01941.01671.00511.00511.00861.01011.00661.0061
AQI 1.07041.10241.09821.09630.93070.91561.02951.0261.03891.0423
SGI 0.92720.92720.93550.98851.021.021.05891.06961.13511.5602
DEPI 0.98960.94960.93330.97881.13321.14731.15361.13580.97890.9474
SGAI 1.17851.17851.12721.07041.0321.0320.97590.94720.87370.8588
LVGI 0.9981.05681.07641.11431.0841.08351.14141.14581.14941.113
TATA -0.1043-0.0876-0.0837-0.0888-0.0967-0.1019-0.0903-0.093-0.0868-0.0709
M-score -3.02-2.90-2.82-2.78-2.97-3.02-2.87-2.97-2.79-2.56
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