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Adobe Systems Inc (NAS:ADBE)
Beneish M-Score
-2.99 (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 -2.99 suggests that the company is not a manipulator.

ADBE' s 10-Year Beneish M-Score Range
Min: -4.18   Max: -0.9
Current: -2.99

-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 * 0.9648+0.528 * 1.0063+0.404 * 0.9155+0.892 * 1.0226+0.115 * 1.1473
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0119+4.679 * -0.096-0.327 * 1.0886
=-2.99

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

This Year (Nov14) TTM:Last Year (Nov13) TTM:
Accounts Receivable was $592 Mil.
Revenue was 1073.328 + 1005.409 + 1068.208 + 1000.12 = $4,147 Mil.
Gross Profit was 912.385 + 847.685 + 913.304 + 851.611 = $3,525 Mil.
Total Current Assets was $4,603 Mil.
Total Assets was $10,786 Mil.
Property, Plant and Equipment(Net PPE) was $785 Mil.
Depreciation, Depletion and Amortization(DDA) was $314 Mil.
Selling, General & Admin. Expense(SGA) was $2,215 Mil.
Total Current Liabilities was $2,510 Mil.
Long-Term Debt was $911 Mil.
Net Income was 73.292 + 44.686 + 88.527 + 47.046 = $254 Mil.
Non Operating Income was 0.343 + 0.669 + 0.553 + -0.409 = $1 Mil.
Cash Flow from Operations was 399.932 + 268.52 + 367.536 + 251.673 = $1,288 Mil.
Accounts Receivable was $600 Mil.
Revenue was 1041.699 + 995.119 + 1010.549 + 1007.873 = $4,055 Mil.
Gross Profit was 894.183 + 848.043 + 875.268 + 851.189 = $3,469 Mil.
Total Current Assets was $4,046 Mil.
Total Assets was $10,380 Mil.
Property, Plant and Equipment(Net PPE) was $660 Mil.
Depreciation, Depletion and Amortization(DDA) was $321 Mil.
Selling, General & Admin. Expense(SGA) was $2,141 Mil.
Total Current Liabilities was $1,526 Mil.
Long-Term Debt was $1,499 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)
=(591.8 / 4147.065) / (599.82 / 4055.24)
=0.14270333 / 0.14791233
=0.9648

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)
=(847.685 / 4055.24) / (912.385 / 4147.065)
=0.85535825 / 0.84999512
=1.0063

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 - (4602.635 + 785.123) / 10786.136) / (1 - (4045.929 + 659.774) / 10380.298)
=0.5004923 / 0.54666976
=0.9155

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
=4147.065 / 4055.24
=1.0226

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))
=(321.227 / (321.227 + 659.774)) / (313.59 / (313.59 + 785.123))
=0.32744819 / 0.28541575
=1.1473

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)
=(2215.14 / 4147.065) / (2140.578 / 4055.24)
=0.53414644 / 0.52785482
=1.0119

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)
=((911.086 + 2510.47) / 10786.136) / ((1499.297 + 1525.648) / 10380.298)
=0.31721795 / 0.29141215
=1.0886

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
=(253.551 - 1.156 - 1287.661) / 10786.136
=-0.096

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 -2.99 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 0.85543.55531.04360.95481.27420.90580.94910.95031.10240.9155
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 0.97731.10740.93180.99931.09090.98530.99691.03761.19141.0119
LVGI 0.85420.57711.31331.2811.32531.2520.96650.89971.05681.0886
TATA -0.0632-0.081-0.1247-0.0731-0.0976-0.0397-0.0766-0.0646-0.081-0.096
M-score -2.59-0.90-3.17-2.53-3.03-2.47-2.70-2.79-2.87-2.99

Adobe Systems Inc Quarterly Data

Aug12Nov12Feb13May13Aug13Nov13Feb14May14Aug14Nov14
DSRI 0.93710.93160.91960.90520.9741.05531.13361.17141.0240.9648
GMI 1.0031.00671.02091.02291.03171.04071.02451.02281.01471.0063
AQI 0.97470.95030.90360.92111.07041.10241.09821.09630.93070.9155
SGI 1.08111.04451.03130.98090.94650.92090.9270.96540.98761.0226
DEPI 1.09751.08891.07611.0210.98960.94960.93330.97881.13321.1473
SGAI 1.02621.03761.06881.10621.14371.19141.15271.10941.081.0119
LVGI 0.92710.89970.95170.9190.9981.05681.07641.11431.0841.0886
TATA -0.0759-0.0653-0.0775-0.0749-0.082-0.081-0.0773-0.0826-0.091-0.096
M-score -2.80-2.79-2.90-2.94-2.92-2.87-2.79-2.75-2.94-2.99
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