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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 -2.65.
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 * 1.1218||+||0.528 * 0.9728||+||0.404 * 0.8943||+||0.892 * 1.0768||+||0.115 * 0.9648|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.992||+||4.679 * -0.0305||-||0.327 * 1.0297|
|This Year (Mar16) TTM:||Last Year (Mar15) TTM:|
|Accounts Receivable was $3,078 Mil.|
Revenue was 5527 + 5536 + 5723 + 5370 = $22,156 Mil.
Gross Profit was 4509 + 4465 + 4689 + 4281 = $17,944 Mil.
Total Current Assets was $42,206 Mil.
Total Assets was $75,116 Mil.
Property, Plant and Equipment(Net PPE) was $4,885 Mil.
Depreciation, Depletion and Amortization(DDA) was $2,105 Mil.
Selling, General & Admin. Expense(SGA) was $5,023 Mil.
Total Current Liabilities was $8,523 Mil.
Long-Term Debt was $32,060 Mil.
Net Income was 1900 + 1800 + 1863 + 1653 = $7,216 Mil.
Non Operating Income was 0 + 0 + 0 + 0 = $0 Mil.
Cash Flow from Operations was 1915 + 2060 + 2874 + 2661 = $9,510 Mil.
|Accounts Receivable was $2,548 Mil.
Revenue was 5033 + 5331 + 5031 + 5180 = $20,575 Mil.
Gross Profit was 4000 + 4148 + 3963 + 4099 = $16,210 Mil.
Total Current Assets was $35,064 Mil.
Total Assets was $68,952 Mil.
Property, Plant and Equipment(Net PPE) was $5,123 Mil.
Depreciation, Depletion and Amortization(DDA) was $2,098 Mil.
Selling, General & Admin. Expense(SGA) was $4,702 Mil.
Total Current Liabilities was $6,336 Mil.
Long-Term Debt was $29,841 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)|
|=||(3078 / 22156)||/||(2548 / 20575)|
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)|
|=||(4465 / 20575)||/||(4509 / 22156)|
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 - (42206 + 4885) / 75116)||/||(1 - (35064 + 5123) / 68952)|
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))|
|=||(2098 / (2098 + 5123))||/||(2105 / (2105 + 4885))|
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)|
|=||(5023 / 22156)||/||(4702 / 20575)|
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)|
|=||((32060 + 8523) / 75116)||/||((29841 + 6336) / 68952)|
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|
|=||(7216 - 0||-||9510)||/||75116|
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 -2.51 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