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Applied Materials Inc (NAS:AMAT)
Beneish M-Score
-2.41 (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 -2.41 suggests that the company is not a manipulator.

AMAT' s 10-Year Beneish M-Score Range
Min: -3.61   Max: 0.04
Current: -2.41

-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 -2.51.


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 * 1.015+0.528 * 0.9759+0.404 * 0.916+0.892 * 1.0969+0.115 * 1.0587
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9332+4.679 * -0.0059-0.327 * 0.9309
=-2.41

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

This Year (Apr15) TTM:Last Year (Apr14) TTM:
Accounts Receivable was $1,798 Mil.
Revenue was 2442 + 2359 + 2264 + 2265 = $9,330 Mil.
Gross Profit was 1016 + 959 + 959 + 992 = $3,926 Mil.
Total Current Assets was $7,447 Mil.
Total Assets was $13,587 Mil.
Property, Plant and Equipment(Net PPE) was $887 Mil.
Depreciation, Depletion and Amortization(DDA) was $369 Mil.
Selling, General & Admin. Expense(SGA) was $910 Mil.
Total Current Liabilities was $2,696 Mil.
Long-Term Debt was $1,947 Mil.
Net Income was 364 + 348 + 256 + 301 = $1,269 Mil.
Non Operating Income was 0 + 0 + 0 + 0 = $0 Mil.
Cash Flow from Operations was 298 + 60 + 407 + 584 = $1,349 Mil.
Accounts Receivable was $1,615 Mil.
Revenue was 2353 + 2190 + 1988 + 1975 = $8,506 Mil.
Gross Profit was 1001 + 891 + 795 + 806 = $3,493 Mil.
Total Current Assets was $6,401 Mil.
Total Assets was $12,555 Mil.
Property, Plant and Equipment(Net PPE) was $855 Mil.
Depreciation, Depletion and Amortization(DDA) was $386 Mil.
Selling, General & Admin. Expense(SGA) was $889 Mil.
Total Current Liabilities was $2,662 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)
=(1798 / 9330) / (1615 / 8506)
=0.19271168 / 0.18986598
=1.015

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 / 8506) / (1016 / 9330)
=0.4106513 / 0.42079314
=0.9759

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 - (7447 + 887) / 13587) / (1 - (6401 + 855) / 12555)
=0.38661956 / 0.42206292
=0.916

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
=9330 / 8506
=1.0969

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))
=(386 / (386 + 855)) / (369 / (369 + 887))
=0.31103948 / 0.29378981
=1.0587

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)
=(910 / 9330) / (889 / 8506)
=0.09753483 / 0.10451446
=0.9332

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 + 2696) / 13587) / ((1947 + 2662) / 12555)
=0.34172371 / 0.36710474
=0.9309

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
=(1269 - 0 - 1349) / 13587
=-0.0059

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 -2.41 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

Jan13Apr13Jul13Oct13Jan14Apr14Jul14Oct14Jan15Apr15
DSRI 0.87010.91930.98421.55421.35771.12211.12960.84650.92011.015
GMI 1.04281.02420.99570.95420.94510.93950.92840.94030.95960.9759
AQI 1.08291.02280.97820.9160.84750.86660.8690.88040.92210.916
SGI 0.80880.7770.77450.86121.00281.12891.22731.20821.13721.0969
DEPI 0.7460.83110.92440.97360.9881.02391.03451.07251.0611.0587
SGAI 1.26031.18861.11840.96910.89180.81520.82010.82770.87930.9332
LVGI 1.02221.06691.07991.04741.0861.03531.03650.99350.94260.9309
TATA -0.1403-0.1441-0.1228-0.0305-0.0413-0.026-0.0321-0.0553-0.0246-0.0059
M-score -3.45-3.48-3.34-2.31-2.44-2.44-2.38-2.73-2.55-2.41
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