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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.
Amgen Inc has a M-score of -2.29 suggests that the company is not a manipulator.
During the past 13 years, the highest Beneish M-Score of Amgen Inc was -0.62. The lowest was -3.09. And the median was -2.57.
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 Amgen 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 * 0.9902||+||0.528 * 0.9925||+||0.404 * 1.5444||+||0.892 * 1.0817||+||0.115 * 0.8752|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9955||+||4.679 * -0.0183||-||0.327 * 0.9573|
|This Year (Dec13) TTM:||Last Year (Dec12) TTM:|
|Accounts Receivable was $2,697 Mil.|
Revenue was 5011 + 4748 + 4679 + 4238 = $18,676 Mil.
Gross Profit was 3982 + 3960 + 3894 + 3494 = $15,330 Mil.
Total Current Assets was $27,367 Mil.
Total Assets was $66,125 Mil.
Property, Plant and Equipment(Net PPE) was $5,349 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,286 Mil.
Selling, General & Admin. Expense(SGA) was $5,184 Mil.
Total Current Liabilities was $7,947 Mil.
Long-Term Debt was $29,623 Mil.
Net Income was 1021 + 1368 + 1258 + 1434 = $5,081 Mil.
Non Operating Income was 0 + 0 + 0 + 0 = $0 Mil.
Cash Flow from Operations was 1835 + 1807 + 1600 + 1049 = $6,291 Mil.
|Accounts Receivable was $2,518 Mil.
Revenue was 4421 + 4319 + 4477 + 4048 = $17,265 Mil.
Gross Profit was 3499 + 3544 + 3725 + 3298 = $14,066 Mil.
Total Current Assets was $31,209 Mil.
Total Assets was $54,298 Mil.
Property, Plant and Equipment(Net PPE) was $5,326 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,088 Mil.
Selling, General & Admin. Expense(SGA) was $4,814 Mil.
Total Current Liabilities was $8,191 Mil.
Long-Term Debt was $24,034 Mil.
1. DSRI = Days Sales in Receivables Index
A large increase in DSR could be indicative of revenue inflation.
|DSRI||=||(Receivables_t / Revenue_t)||/||(Receivables_t-1 / Revenue_t-1)|
|=||(2697 / 18676)||/||(2518 / 17265)|
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.
|=||(GrossProfit_t-1 / Revenue_t-1)||/||(GrossProfit_t / Revenue_t)|
|=||(3960 / 17265)||/||(3982 / 18676)|
3. AQI = Asset Quality Index
AQI is the ratio of asset quality in year t to year t-1.
|AQI||=||(1 - (CurrentAssets_t + PPE_t) / TotalAssets_t)||/||(1 - (CurrentAssets_t-1 + PPE_t-1) / TotalAssets_t-1)|
|=||(1 - (27367 + 5349) / 66125)||/||(1 - (31209 + 5326) / 54298)|
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.
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))|
|=||(1088 / (1088 + 5326))||/||(1286 / (1286 + 5349))|
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)|
|=||(5184 / 18676)||/||(4814 / 17265)|
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)|
|=||((29623 + 7947) / 66125)||/||((24034 + 8191) / 54298)|
8. TATA = Total Accruals to Total Assets
Total accruals calculated as the change in working capital accounts other than cash less depreciation.
|=||(NetIncome_t - NonOperatingIncome_t||-||CashFlowsfromOperations_t)||/||TotalAssets_t|
|=||(5081 - 0||-||6291)||/||66125|
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.
Amgen Inc has a M-score of -2.29 suggests that the company will not be a manipulator.
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
Amgen Inc Annual Data
Amgen Inc Quarterly Data