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Adobe Systems Inc (NAS:ADBE)
Beneish M-Score
-2.78 (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 -2.78 suggests that the company is not a manipulator.

ADBE' s Beneish M-Score Range Over the Past 10 Years
Min: -4.18   Max: -0.68
Current: -2.78

-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 -2.87.


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 * 0.9448+0.528 * 1.0031+0.404 * 0.9127+0.892 * 1.1911+0.115 * 0.9557
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.8837+4.679 * -0.0828-0.327 * 1.0404
=-2.78

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

This Year (Feb16) TTM:Last Year (Feb15) TTM:
Accounts Receivable was $599 Mil.
Revenue was 1383.335 + 1306.404 + 1217.768 + 1162.158 = $5,070 Mil.
Gross Profit was 1184.763 + 1105.043 + 1026.783 + 976.985 = $4,294 Mil.
Total Current Assets was $4,935 Mil.
Total Assets was $11,897 Mil.
Property, Plant and Equipment(Net PPE) was $795 Mil.
Depreciation, Depletion and Amortization(DDA) was $341 Mil.
Selling, General & Admin. Expense(SGA) was $2,299 Mil.
Total Current Liabilities was $2,232 Mil.
Long-Term Debt was $1,917 Mil.
Net Income was 254.307 + 222.705 + 174.465 + 147.493 = $799 Mil.
Non Operating Income was -7.659 + 14.789 + -4.275 + -2.884 = $-0 Mil.
Cash Flow from Operations was 497.527 + 454.515 + 360.488 + 471.484 = $1,784 Mil.
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.



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)
=(599.207 / 5069.665) / (532.427 / 4256.126)
=0.11819459 / 0.12509663
=0.9448

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)
=(1105.043 / 4256.126) / (1184.763 / 5069.665)
=0.84954181 / 0.84691474
=1.0031

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 - (4935.39 + 794.876) / 11896.682) / (1 - (3972.159 + 784.314) / 11008.422)
=0.51833074 / 0.56792418
=0.9127

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
=5069.665 / 4256.126
=1.1911

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))
=(315.589 / (315.589 + 784.314)) / (341.038 / (341.038 + 794.876))
=0.28692439 / 0.30023224
=0.9557

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)
=(2299.165 / 5069.665) / (2184.337 / 4256.126)
=0.45351419 / 0.51322188
=0.8837

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)
=((1916.831 + 2231.806) / 11896.682) / ((1901.554 + 1788.16) / 11008.422)
=0.34872219 / 0.33517193
=1.0404

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
=(798.97 - -0.029 - 1784.014) / 11896.682
=-0.0828

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 -2.78 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 0.66611.10381.1251.10011.0671.16581.08890.94961.14730.9474
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 -0.081-0.1247-0.0707-0.0981-0.0397-0.0766-0.0646-0.081-0.0946-0.0721
M-score -0.91-3.17-2.52-3.03-2.47-2.70-2.79-2.87-2.98-2.70

Adobe Systems Inc Quarterly Data

Nov13Feb14May14Aug14Nov14Feb15May15Aug15Nov15Feb16
DSRI 1.05531.13361.17141.0240.96480.99180.89231.01340.9820.9448
GMI 1.04071.02451.02281.01471.00631.00891.011.00761.00621.0031
AQI 1.10241.09821.09630.93070.91561.02951.0261.03891.04230.9127
SGI 0.92090.9270.96540.98761.02261.05151.05971.10861.15641.1911
DEPI 0.94960.93330.97881.13321.14731.15361.13580.97890.94740.9557
SGAI 1.19141.15271.10941.081.0030.96220.94110.88530.87250.8837
LVGI 1.05681.07641.11431.0841.08351.14141.14581.14941.1131.0404
TATA -0.081-0.0771-0.0822-0.0902-0.0933-0.0818-0.0846-0.0787-0.0721-0.0828
M-score -2.87-2.79-2.75-2.94-2.97-2.83-2.93-2.75-2.70-2.78
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