Switch to:
Applied Materials Inc (NAS:AMAT)
Beneish M-Score
-2.47 (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 -2.47 suggests that the company is not a manipulator.

AMAT' s 10-Year Beneish M-Score Range
Min: -3.59   Max: -0.28
Current: -2.47

-3.59
-0.28

During the past 13 years, the highest Beneish M-Score of Applied Materials Inc was -0.28. The lowest was -3.59. And the median was -2.50.


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 * 1.0781+0.528 * 0.9395+0.404 * 0.8666+0.892 * 1.1289+0.115 * 1.0239
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.8116+4.679 * -0.0254-0.327 * 1.0353
=-2.47

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

This Year (Apr14) TTM:Last Year (Apr13) TTM:
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 $885 Mil.
Total Current Liabilities was $2,662 Mil.
Long-Term Debt was $1,947 Mil.
Net Income was 262 + 253 + 183 + 168 = $866 Mil.
Non Operating Income was 0 + -3 + -1 + -3 = $-7 Mil.
Cash Flow from Operations was 437 + 372 + 19 + 364 = $1,192 Mil.
Accounts Receivable was $1,327 Mil.
Revenue was 1973 + 1573 + 1646 + 2343 = $7,535 Mil.
Gross Profit was 808 + 582 + 587 + 930 = $2,907 Mil.
Total Current Assets was $5,113 Mil.
Total Assets was $11,695 Mil.
Property, Plant and Equipment(Net PPE) was $886 Mil.
Depreciation, Depletion and Amortization(DDA) was $414 Mil.
Selling, General & Admin. Expense(SGA) was $966 Mil.
Total Current Liabilities was $2,201 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)
=(1615 / 8506) / (1327 / 7535)
=0.18986598 / 0.17611148
=1.0781

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)
=(891 / 7535) / (1001 / 8506)
=0.3857996 / 0.4106513
=0.9395

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 - (6401 + 855) / 12555) / (1 - (5113 + 886) / 11695)
=0.42206292 / 0.48704575
=0.8666

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
=8506 / 7535
=1.1289

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))
=(414 / (414 + 886)) / (386 / (386 + 855))
=0.31846154 / 0.31103948
=1.0239

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)
=(885 / 8506) / (966 / 7535)
=0.1040442 / 0.12820173
=0.8116

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 + 2662) / 12555) / ((1946 + 2201) / 11695)
=0.36710474 / 0.35459598
=1.0353

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
=(866 - -7 - 1192) / 12555
=-0.0254

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 -2.47 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

Oct04Oct05Oct06Oct07Oct08Oct09Oct10Oct11Oct12Oct13
DSRI 1.02231.10860.95660.95251.06151.09450.78430.75931.02911.457
GMI 0.77581.04660.94271.01451.08971.4840.73350.93841.0910.9539
AQI 1.04377.26870.89381.12421.04760.98921.00640.64832.64210.916
SGI 1.78970.87261.31111.06190.83510.61671.90461.10140.8290.8612
DEPI 0.94291.09910.91341.02710.89861.07370.87621.08730.69830.9736
SGAI 0.6711.06340.99170.98911.21351.2340.67330.86841.44050.9734
LVGI 1.0970.86411.44460.87011.17990.78171.26411.21051.01731.0474
TATA -0.0206-0.0152-0.0439-0.0441-0.0713-0.0542-0.0705-0.0361-0.1425-0.03
M-score -1.930.04-2.67-2.57-2.94-2.70-2.38-2.99-2.68-2.40

Applied Materials Inc Quarterly Data

Jan12Apr12Jul12Oct12Jan13Apr13Jul13Oct13Jan14Apr14
DSRI 0.83960.99511.02731.0290.87010.95681.00941.4571.35771.0781
GMI 0.99581.01711.08921.09081.04281.02420.99570.95420.94510.9395
AQI 1.65981.82782.32612.64211.08291.02280.97820.9160.84750.8666
SGI 0.96460.88540.82460.82910.80880.7770.77450.86121.00281.1289
DEPI 1.0450.87340.78140.69830.7460.83110.92440.97360.9881.0239
SGAI 1.08411.26481.39551.43881.26031.18861.11840.97340.86490.8116
LVGI 1.1811.15020.88231.01731.02221.06691.07991.04741.0861.0353
TATA -0.0474-0.0534-0.0793-0.1425-0.1403-0.1441-0.1225-0.0301-0.0407-0.0254
M-score -2.69-2.60-2.45-2.68-3.45-3.44-3.31-2.40-2.44-2.47
Get WordPress Plugins for easy affiliate links on Stock Tickers and Guru Names | Earn affiliate commissions by embedding GuruFocus Charts
GuruFocus Affiliate Program: Earn up to $400 per referral. ( Learn More)
Free 7-day Trial
FEEDBACK
Email Hide