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Applied Materials Inc (NAS:AMAT)
Beneish M-Score
-2.50 (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.

Applied Materials Inc has a M-score of -2.50 suggests that the company is not a manipulator.

AMAT' s Beneish M-Score Range Over the Past 10 Years
Min: -3.4   Max: -0.06
Current: -2.5

-3.4
-0.06

During the past 13 years, the highest Beneish M-Score of Applied Materials Inc was -0.06. The lowest was -3.40. And the median was -2.62.


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 Applied Materials 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 * 0.978+0.528 * 1.0353+0.404 * 0.8298+0.892 * 1.0647+0.115 * 1.0329
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9015+4.679 * 0.014-0.327 * 1.2882
=-2.50

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

This Year (Oct15) TTM:Last Year (Oct14) TTM:
Accounts Receivable was $1,739 Mil.
Revenue was 2368 + 2490 + 2442 + 2359 = $9,659 Mil.
Gross Profit was 959 + 1018 + 1016 + 959 = $3,952 Mil.
Total Current Assets was $9,261 Mil.
Total Assets was $15,308 Mil.
Property, Plant and Equipment(Net PPE) was $892 Mil.
Depreciation, Depletion and Amortization(DDA) was $371 Mil.
Selling, General & Admin. Expense(SGA) was $883 Mil.
Total Current Liabilities was $3,798 Mil.
Long-Term Debt was $3,342 Mil.
Net Income was 336 + 329 + 364 + 348 = $1,377 Mil.
Non Operating Income was 0 + 0 + 0 + 0 = $0 Mil.
Cash Flow from Operations was 471 + 334 + 298 + 60 = $1,163 Mil.
Accounts Receivable was $1,670 Mil.
Revenue was 2264 + 2265 + 2353 + 2190 = $9,072 Mil.
Gross Profit was 959 + 992 + 1001 + 891 = $3,843 Mil.
Total Current Assets was $6,967 Mil.
Total Assets was $13,174 Mil.
Property, Plant and Equipment(Net PPE) was $861 Mil.
Depreciation, Depletion and Amortization(DDA) was $375 Mil.
Selling, General & Admin. Expense(SGA) was $920 Mil.
Total Current Liabilities was $2,823 Mil.
Long-Term Debt was $1,947 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)
=(1739 / 9659) / (1670 / 9072)
=0.18003934 / 0.18408289
=0.978

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)
=(1018 / 9072) / (959 / 9659)
=0.42361111 / 0.40915209
=1.0353

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 - (9261 + 892) / 15308) / (1 - (6967 + 861) / 13174)
=0.33675203 / 0.4057993
=0.8298

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
=9659 / 9072
=1.0647

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))
=(375 / (375 + 861)) / (371 / (371 + 892))
=0.30339806 / 0.29374505
=1.0329

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)
=(883 / 9659) / (920 / 9072)
=0.09141733 / 0.10141093
=0.9015

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)
=((3342 + 3798) / 15308) / ((1947 + 2823) / 13174)
=0.46642279 / 0.36207682
=1.2882

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
=(1377 - 0 - 1163) / 15308
=0.014

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.

Applied Materials Inc has a M-score of -2.50 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.

Applied Materials Inc Annual Data

Oct06Oct07Oct08Oct09Oct10Oct11Oct12Oct13Oct14Oct15
DSRI 0.95660.95250.98810.99860.9230.75970.96061.55420.84650.978
GMI 0.94271.01451.08971.4840.73350.93841.0910.95390.94031.0353
AQI 0.89381.12421.04760.98921.00640.64832.64210.9160.88040.8298
SGI 1.31111.06190.83510.61671.90461.10140.8290.86121.20821.0647
DEPI 0.91341.02710.89861.07370.87621.08730.69830.97361.07251.0329
SGAI 0.99170.98911.21351.2340.67330.86841.44050.96910.8480.9015
LVGI 1.44460.87011.17990.78171.26411.21051.01731.04740.99351.2882
TATA -0.0439-0.0441-0.0713-0.0542-0.0705-0.0361-0.1425-0.0305-0.05530.014
M-score -2.67-2.57-3.01-2.79-2.26-2.99-2.74-2.31-2.74-2.50

Applied Materials Inc Quarterly Data

Jul13Oct13Jan14Apr14Jul14Oct14Jan15Apr15Jul15Oct15
DSRI 0.98421.55421.35771.12211.12960.84650.92011.0151.130.978
GMI 0.99570.95420.94510.93950.92840.94030.95960.97591.01121.0353
AQI 0.97820.9160.84750.86660.8690.88040.92210.9160.95260.8298
SGI 0.77450.86121.00281.12891.22731.20821.13721.09691.08631.0647
DEPI 0.92440.97360.9881.02391.03451.07251.0611.05871.04631.0329
SGAI 1.11840.96910.89180.81520.81130.8480.90090.95580.95070.9015
LVGI 1.07991.04741.0861.03531.03650.99350.94260.93090.9491.2882
TATA -0.1228-0.0305-0.0413-0.026-0.0321-0.0553-0.0246-0.00590.01510.014
M-score -3.34-2.31-2.44-2.44-2.37-2.74-2.56-2.42-2.20-2.50
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