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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.
During the past 13 years, the highest Beneish M-Score of Amgen Inc was 0.36. The lowest was -3.17. And the median was -2.64.
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 * 1.0445||+||0.528 * 0.9784||+||0.404 * 0.8985||+||0.892 * 1.0515||+||0.115 * 0.9903|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0306||+||4.679 * -0.0139||-||0.327 * 1.0024|
|This Year (Sep16) TTM:||Last Year (Sep15) TTM:|
|Accounts Receivable was $3,186 Mil.|
Revenue was 5811 + 5688 + 5527 + 5536 = $22,562 Mil.
Gross Profit was 4784 + 4638 + 4509 + 4465 = $18,396 Mil.
Total Current Assets was $45,844 Mil.
Total Assets was $78,150 Mil.
Property, Plant and Equipment(Net PPE) was $4,912 Mil.
Depreciation, Depletion and Amortization(DDA) was $2,088 Mil.
Selling, General & Admin. Expense(SGA) was $5,155 Mil.
Total Current Liabilities was $10,542 Mil.
Long-Term Debt was $30,526 Mil.
Net Income was 2017 + 1870 + 1900 + 1800 = $7,587 Mil.
Non Operating Income was 0 + 0 + 0 + 0 = $0 Mil.
Cash Flow from Operations was 2662 + 2677 + 1915 + 1419 = $8,673 Mil.
|Accounts Receivable was $2,901 Mil.
Revenue was 5723 + 5370 + 5033 + 5331 = $21,457 Mil.
Gross Profit was 4689 + 4281 + 4000 + 4148 = $17,118 Mil.
Total Current Assets was $38,844 Mil.
Total Assets was $71,869 Mil.
Property, Plant and Equipment(Net PPE) was $4,988 Mil.
Depreciation, Depletion and Amortization(DDA) was $2,091 Mil.
Selling, General & Admin. Expense(SGA) was $4,757 Mil.
Total Current Liabilities was $7,165 Mil.
Long-Term Debt was $30,511 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)|
|=||(3186 / 22562)||/||(2901 / 21457)|
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)|
|=||(17118 / 21457)||/||(18396 / 22562)|
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 - (45844 + 4912) / 78150)||/||(1 - (38844 + 4988) / 71869)|
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))|
|=||(2091 / (2091 + 4988))||/||(2088 / (2088 + 4912))|
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)|
|=||(5155 / 22562)||/||(4757 / 21457)|
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)|
|=||((30526 + 10542) / 78150)||/||((30511 + 7165) / 71869)|
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|
|=||(7587 - 0||-||8673)||/||78150|
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 -2.52 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