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Adobe Systems Inc (NAS:ADBE)
Beneish M-Score
-2.93 (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 -2.93 suggests that the company is not a manipulator.

ADBE' s 10-Year Beneish M-Score Range
Min: -4.18   Max: -0.68
Current: -2.93

-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 * 0.8923+0.528 * 1.01+0.404 * 1.026+0.892 * 1.0597+0.115 * 1.1358
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9411+4.679 * -0.0859-0.327 * 1.1458
=-2.93

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

This Year (May15) TTM:Last Year (May14) TTM:
Accounts Receivable was $503 Mil.
Revenue was 1162.158 + 1109.181 + 1073.328 + 1005.409 = $4,350 Mil.
Gross Profit was 976.985 + 942.383 + 912.385 + 847.685 = $3,679 Mil.
Total Current Assets was $4,178 Mil.
Total Assets was $11,165 Mil.
Property, Plant and Equipment(Net PPE) was $785 Mil.
Depreciation, Depletion and Amortization(DDA) was $324 Mil.
Selling, General & Admin. Expense(SGA) was $2,186 Mil.
Total Current Liabilities was $1,937 Mil.
Long-Term Debt was $1,904 Mil.
Net Income was 147.493 + 84.888 + 88.136 + 44.686 = $365 Mil.
Non Operating Income was -2.884 + -1.52 + 8.83 + -3.151 = $1 Mil.
Cash Flow from Operations was 471.484 + 183.015 + 399.753 + 268.52 = $1,323 Mil.
Accounts Receivable was $532 Mil.
Revenue was 1068.208 + 1000.12 + 1041.699 + 995.119 = $4,105 Mil.
Gross Profit was 913.304 + 851.611 + 894.183 + 848.043 = $3,507 Mil.
Total Current Assets was $4,114 Mil.
Total Assets was $10,372 Mil.
Property, Plant and Equipment(Net PPE) was $642 Mil.
Depreciation, Depletion and Amortization(DDA) was $319 Mil.
Selling, General & Admin. Expense(SGA) was $2,192 Mil.
Total Current Liabilities was $2,218 Mil.
Long-Term Debt was $897 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)
=(502.617 / 4350.076) / (531.557 / 4105.146)
=0.11554212 / 0.12948553
=0.8923

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)
=(942.383 / 4105.146) / (976.985 / 4350.076)
=0.85432796 / 0.84583304
=1.01

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 - (4178.397 + 785.199) / 11165.383) / (1 - (4114.343 + 642.45) / 10372.199)
=0.55544776 / 0.54139011
=1.026

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
=4350.076 / 4105.146
=1.0597

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))
=(318.814 / (318.814 + 642.45)) / (323.865 / (323.865 + 785.199))
=0.33166123 / 0.29201651
=1.1358

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)
=(2185.575 / 4350.076) / (2191.707 / 4105.146)
=0.50242226 / 0.53389258
=0.9411

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)
=((1904.376 + 1937.033) / 11165.383) / ((896.551 + 2217.972) / 10372.199)
=0.34404633 / 0.30027606
=1.1458

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
=(365.203 - 1.275 - 1322.772) / 11165.383
=-0.0859

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 -2.93 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

Feb05Feb06Feb07Feb08Feb09Feb10Feb11Feb12Feb13Feb14
DSRI
GMI
AQI
SGI
DEPI
SGAI
LVGI
TATA
M-score

Adobe Systems Inc Quarterly Data

Feb13May13Aug13Nov13Feb14May14Aug14Nov14Feb15May15
DSRI 0.91960.90520.9741.05531.13361.17141.0240.96480.99180.8923
GMI 1.02091.02291.03171.04071.02451.02281.01471.00631.00891.01
AQI 0.90360.92111.07041.10241.09821.09630.93070.91561.02951.026
SGI 1.03130.98090.94650.92090.9270.96540.98761.02261.05151.0597
DEPI 1.07611.0210.98960.94960.93330.97881.13321.14731.15361.1358
SGAI 1.06881.10621.14371.19141.15271.10941.081.0030.96220.9411
LVGI 0.95170.9190.9981.05681.07641.11431.0841.08351.14141.1458
TATA -0.0775-0.0749-0.082-0.0826-0.0787-0.0838-0.0918-0.0946-0.0831-0.0859
M-score -2.90-2.94-2.92-2.88-2.80-2.75-2.94-2.98-2.84-2.93
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