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Applied Materials Inc (NAS:AMAT)
Beneish M-Score
-2.56 (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 -2.56 suggests that the company is not a manipulator.

AMAT' s 10-Year Beneish M-Score Range
Min: -3.61   Max: 0.04
Current: -2.56

-3.61
0.04

During the past 13 years, the highest Beneish M-Score of Applied Materials Inc was 0.04. The lowest was -3.61. And the median was -2.52.


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 * 0.9201+0.528 * 0.9596+0.404 * 0.9221+0.892 * 1.1372+0.115 * 1.061
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9019+4.679 * -0.0246-0.327 * 0.9426
=-2.56

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

This Year (Jan15) TTM:Last Year (Jan14) TTM:
Accounts Receivable was $1,580 Mil.
Revenue was 2359 + 2264 + 2265 + 2353 = $9,241 Mil.
Gross Profit was 959 + 959 + 992 + 1001 = $3,911 Mil.
Total Current Assets was $6,933 Mil.
Total Assets was $13,073 Mil.
Property, Plant and Equipment(Net PPE) was $864 Mil.
Depreciation, Depletion and Amortization(DDA) was $373 Mil.
Selling, General & Admin. Expense(SGA) was $920 Mil.
Total Current Liabilities was $2,521 Mil.
Long-Term Debt was $1,947 Mil.
Net Income was 348 + 256 + 301 + 262 = $1,167 Mil.
Non Operating Income was 0 + 0 + 0 + 0 = $0 Mil.
Cash Flow from Operations was 60 + 407 + 584 + 437 = $1,488 Mil.
Accounts Receivable was $1,510 Mil.
Revenue was 2190 + 1988 + 1975 + 1973 = $8,126 Mil.
Gross Profit was 891 + 795 + 806 + 808 = $3,300 Mil.
Total Current Assets was $6,014 Mil.
Total Assets was $12,199 Mil.
Property, Plant and Equipment(Net PPE) was $846 Mil.
Depreciation, Depletion and Amortization(DDA) was $398 Mil.
Selling, General & Admin. Expense(SGA) was $897 Mil.
Total Current Liabilities was $2,477 Mil.
Long-Term Debt was $1,946 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)
=(1580 / 9241) / (1510 / 8126)
=0.17097717 / 0.18582328
=0.9201

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)
=(959 / 8126) / (959 / 9241)
=0.40610386 / 0.42322259
=0.9596

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 - (6933 + 864) / 13073) / (1 - (6014 + 846) / 12199)
=0.4035799 / 0.43765882
=0.9221

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
=9241 / 8126
=1.1372

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))
=(398 / (398 + 846)) / (373 / (373 + 864))
=0.31993569 / 0.30153597
=1.061

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)
=(920 / 9241) / (897 / 8126)
=0.09955633 / 0.11038641
=0.9019

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)
=((1947 + 2521) / 13073) / ((1946 + 2477) / 12199)
=0.34177312 / 0.3625707
=0.9426

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
=(1167 - 0 - 1488) / 13073
=-0.0246

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 -2.56 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

Oct05Oct06Oct07Oct08Oct09Oct10Oct11Oct12Oct13Oct14
DSRI 1.10860.95660.95250.98810.99860.9230.75970.96061.55420.8465
GMI 1.04660.94271.01451.08971.4840.73350.93841.0910.95390.9403
AQI 7.26870.89381.12421.04760.98921.00640.64832.64210.9160.8804
SGI 0.87261.31111.06190.83510.61671.90461.10140.8290.86121.2082
DEPI 1.09910.91341.02710.89861.07370.87621.08730.69830.97361.0725
SGAI 1.06340.99170.98911.21351.2340.67330.86841.44050.96910.8203
LVGI 0.86411.44460.87011.17990.78171.26411.21051.01731.04740.9935
TATA -0.0152-0.0439-0.0441-0.0713-0.0542-0.0705-0.0361-0.1425-0.0305-0.0553
M-score 0.04-2.67-2.57-3.01-2.79-2.26-2.99-2.74-2.31-2.73

Applied Materials Inc Quarterly Data

Oct12Jan13Apr13Jul13Oct13Jan14Apr14Jul14Oct14Jan15
DSRI 0.96050.87010.91930.98421.55421.35771.12211.12960.84650.9201
GMI 1.09081.04281.02420.99570.95420.94510.93950.92840.94030.9596
AQI 2.64211.08291.02280.97820.9160.84750.86660.8690.88040.9221
SGI 0.82910.80880.7770.77450.86121.00281.12891.22731.20821.1372
DEPI 0.69830.7460.83110.92440.97360.9881.02391.03451.07251.061
SGAI 1.43881.26031.18861.11840.96910.89180.83630.84050.84890.9019
LVGI 1.01731.02221.06691.07991.04741.0861.03531.03650.99350.9426
TATA -0.1425-0.1403-0.1441-0.1228-0.0305-0.0413-0.026-0.0321-0.0553-0.0246
M-score -2.74-3.45-3.48-3.34-2.31-2.44-2.44-2.38-2.74-2.56
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