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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 0.34. The lowest was -3.09. And the median was -2.68.
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 * 0.9656||+||0.528 * 1.0072||+||0.404 * 0.9303||+||0.892 * 1.0671||+||0.115 * 0.8358|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.8986||+||4.679 * -0.0494||-||0.327 * 0.9487|
|This Year (Jun15) TTM:||Last Year (Jun14) TTM:|
|Accounts Receivable was $2,779 Mil.|
Revenue was 5370 + 5033 + 5331 + 5031 = $20,765 Mil.
Gross Profit was 4281 + 4000 + 4148 + 3963 = $16,392 Mil.
Total Current Assets was $37,736 Mil.
Total Assets was $71,209 Mil.
Property, Plant and Equipment(Net PPE) was $5,050 Mil.
Depreciation, Depletion and Amortization(DDA) was $2,111 Mil.
Selling, General & Admin. Expense(SGA) was $4,726 Mil.
Total Current Liabilities was $6,891 Mil.
Long-Term Debt was $30,702 Mil.
Net Income was 1653 + 1623 + 1294 + 1244 = $5,814 Mil.
Non Operating Income was 0 + 0 + 0 + 0 = $0 Mil.
Cash Flow from Operations was 2814 + 1329 + 2445 + 2741 = $9,329 Mil.
|Accounts Receivable was $2,697 Mil.
Revenue was 5180 + 4521 + 5011 + 4748 = $19,460 Mil.
Gross Profit was 4099 + 3431 + 3982 + 3960 = $15,472 Mil.
Total Current Assets was $34,328 Mil.
Total Assets was $69,534 Mil.
Property, Plant and Equipment(Net PPE) was $5,371 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,756 Mil.
Selling, General & Admin. Expense(SGA) was $4,929 Mil.
Total Current Liabilities was $7,866 Mil.
Long-Term Debt was $30,828 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)|
|=||(2779 / 20765)||/||(2697 / 19460)|
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)|
|=||(4000 / 19460)||/||(4281 / 20765)|
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 - (37736 + 5050) / 71209)||/||(1 - (34328 + 5371) / 69534)|
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))|
|=||(1756 / (1756 + 5371))||/||(2111 / (2111 + 5050))|
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)|
|=||(4726 / 20765)||/||(4929 / 19460)|
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)|
|=||((30702 + 6891) / 71209)||/||((30828 + 7866) / 69534)|
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|
|=||(5814 - 0||-||9329)||/||71209|
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 -2.69 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