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Applied Materials Inc (NAS:AMAT)
Beneish M-Score
-2.85 (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 -2.85 suggests that the company is not a manipulator.

AMAT' s Beneish M-Score Range Over the Past 10 Years
Min: -3.58   Max: 0.09
Current: -2.85

-3.58
0.09

During the past 13 years, the highest Beneish M-Score of Applied Materials Inc was 0.09. The lowest was -3.58. And the median was -2.49.


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 * 0.8981+0.528 * 1.0054+0.404 * 0.9908+0.892 * 1.0357+0.115 * 0.9883
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.7663+4.679 * -0.0506-0.327 * 1.326
=-2.85

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

This Year (Jul16) TTM:Last Year (Jul15) TTM:
Accounts Receivable was $1,852 Mil.
Revenue was 2821 + 2450 + 2257 + 2368 = $9,896 Mil.
Gross Profit was 1192 + 1004 + 916 + 959 = $4,071 Mil.
Total Current Assets was $7,399 Mil.
Total Assets was $13,699 Mil.
Property, Plant and Equipment(Net PPE) was $905 Mil.
Depreciation, Depletion and Amortization(DDA) was $385 Mil.
Selling, General & Admin. Expense(SGA) was $750 Mil.
Total Current Liabilities was $2,964 Mil.
Long-Term Debt was $3,343 Mil.
Net Income was 505 + 320 + 286 + 336 = $1,447 Mil.
Non Operating Income was 0 + 0 + 0 + 0 = $0 Mil.
Cash Flow from Operations was 981 + 481 + 207 + 471 = $2,140 Mil.
Accounts Receivable was $1,991 Mil.
Revenue was 2490 + 2442 + 2359 + 2264 = $9,555 Mil.
Gross Profit was 1018 + 1016 + 959 + 959 = $3,952 Mil.
Total Current Assets was $7,043 Mil.
Total Assets was $13,153 Mil.
Property, Plant and Equipment(Net PPE) was $882 Mil.
Depreciation, Depletion and Amortization(DDA) was $369 Mil.
Selling, General & Admin. Expense(SGA) was $945 Mil.
Total Current Liabilities was $3,020 Mil.
Long-Term Debt was $1,547 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)
=(1852 / 9896) / (1991 / 9555)
=0.18714632 / 0.20837258
=0.8981

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)
=(3952 / 9555) / (4071 / 9896)
=0.41360544 / 0.41137833
=1.0054

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 - (7399 + 905) / 13699) / (1 - (7043 + 882) / 13153)
=0.39382437 / 0.39747586
=0.9908

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
=9896 / 9555
=1.0357

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))
=(369 / (369 + 882)) / (385 / (385 + 905))
=0.29496403 / 0.29844961
=0.9883

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)
=(750 / 9896) / (945 / 9555)
=0.0757882 / 0.0989011
=0.7663

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)
=((3343 + 2964) / 13699) / ((1547 + 3020) / 13153)
=0.46039857 / 0.34722117
=1.326

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
=(1447 - 0 - 2140) / 13699
=-0.0506

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 -2.85 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 0.99170.98911.21351.2340.67330.86841.44050.96150.85470.9015
LVGI 1.44460.87011.17990.78171.26411.21051.01731.04740.99351.2882
TATA -0.1043-0.0441-0.0649-0.0542-0.0705-0.0361-0.1439-0.0305-0.05530.014
M-score -2.96-2.57-2.98-2.79-2.26-2.99-2.75-2.31-2.74-2.50

Applied Materials Inc Quarterly Data

Apr14Jul14Oct14Jan15Apr15Jul15Oct15Jan16Apr16Jul16
DSRI 1.12211.12960.84650.92011.0151.130.9780.99451.03780.8981
GMI 0.93950.92840.94030.95960.97591.01121.03531.03471.03281.0054
AQI 0.86660.8690.88040.92210.9160.95260.82981.02421.07670.9908
SGI 1.12891.22731.20821.13721.09691.08631.06471.03421.02521.0357
DEPI 1.02391.03451.07251.0611.05871.04631.03291.03170.99090.9883
SGAI 0.80880.8050.85470.9080.96340.95810.90150.8870.82370.7663
LVGI 1.03531.03650.99350.94260.93090.9491.28821.24051.33261.326
TATA -0.026-0.0321-0.0553-0.0246-0.00590.01510.0140.0004-0.017-0.0506
M-score -2.44-2.37-2.74-2.56-2.42-2.20-2.50-2.48-2.53-2.85
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