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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 -2.72 suggests that the company is not a 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 -2.67.
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 * 0.808||+||0.528 * 1.0473||+||0.404 * 1.1251||+||0.892 * 1.0916||+||0.115 * 0.6307|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.8901||+||4.679 * -0.0432||-||0.327 * 0.9829|
|This Year (Sep14) TTM:||Last Year (Sep13) TTM:|
|Accounts Receivable was $2,355 Mil.|
Revenue was 5031 + 5180 + 4521 + 5011 = $19,743 Mil.
Gross Profit was 3963 + 4099 + 3431 + 3982 = $15,475 Mil.
Total Current Assets was $36,048 Mil.
Total Assets was $70,775 Mil.
Property, Plant and Equipment(Net PPE) was $5,267 Mil.
Depreciation, Depletion and Amortization(DDA) was $2,011 Mil.
Selling, General & Admin. Expense(SGA) was $4,893 Mil.
Total Current Liabilities was $8,551 Mil.
Long-Term Debt was $30,480 Mil.
Net Income was 1244 + 1547 + 1073 + 1021 = $4,885 Mil.
Non Operating Income was 0 + 0 + 0 + 0 = $0 Mil.
Cash Flow from Operations was 2741 + 2227 + 1142 + 1835 = $7,945 Mil.
|Accounts Receivable was $2,670 Mil.
Revenue was 4748 + 4679 + 4238 + 4421 = $18,086 Mil.
Gross Profit was 3960 + 3894 + 3494 + 3499 = $14,847 Mil.
Total Current Assets was $30,675 Mil.
Total Assets was $57,073 Mil.
Property, Plant and Equipment(Net PPE) was $5,283 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,115 Mil.
Selling, General & Admin. Expense(SGA) was $5,036 Mil.
Total Current Liabilities was $4,843 Mil.
Long-Term Debt was $27,178 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)|
|=||(2355 / 19743)||/||(2670 / 18086)|
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)|
|=||(4099 / 18086)||/||(3963 / 19743)|
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 - (36048 + 5267) / 70775)||/||(1 - (30675 + 5283) / 57073)|
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))|
|=||(1115 / (1115 + 5283))||/||(2011 / (2011 + 5267))|
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)|
|=||(4893 / 19743)||/||(5036 / 18086)|
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)|
|=||((30480 + 8551) / 70775)||/||((27178 + 4843) / 57073)|
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|
|=||(4885 - 0||-||7945)||/||70775|
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 -2.72 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