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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 -0.62. The lowest was -3.09. And the median was -2.58.
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 * 0.8788||+||0.528 * 1.0529||+||0.404 * 0.8338||+||0.892 * 1.0743||+||0.115 * 0.6777|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.8438||+||4.679 * -0.0492||-||0.327 * 0.9494|
|This Year (Dec14) TTM:||Last Year (Dec13) TTM:|
|Accounts Receivable was $2,546 Mil.|
Revenue was 5331 + 5031 + 5180 + 4521 = $20,063 Mil.
Gross Profit was 4148 + 3963 + 4099 + 3431 = $15,641 Mil.
Total Current Assets was $34,713 Mil.
Total Assets was $69,009 Mil.
Property, Plant and Equipment(Net PPE) was $5,223 Mil.
Depreciation, Depletion and Amortization(DDA) was $2,092 Mil.
Selling, General & Admin. Expense(SGA) was $4,699 Mil.
Total Current Liabilities was $7,008 Mil.
Long-Term Debt was $30,215 Mil.
Net Income was 1294 + 1244 + 1547 + 1073 = $5,158 Mil.
Non Operating Income was 0 + 0 + 0 + 0 = $0 Mil.
Cash Flow from Operations was 2445 + 2741 + 2227 + 1142 = $8,555 Mil.
|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.
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)|
|=||(2546 / 20063)||/||(2697 / 18676)|
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)|
|=||(3963 / 18676)||/||(4148 / 20063)|
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 - (34713 + 5223) / 69009)||/||(1 - (27367 + 5349) / 66125)|
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))|
|=||(1286 / (1286 + 5349))||/||(2092 / (2092 + 5223))|
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)|
|=||(4699 / 20063)||/||(5184 / 18676)|
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)|
|=||((30215 + 7008) / 69009)||/||((29623 + 7947) / 66125)|
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|
|=||(5158 - 0||-||8555)||/||69009|
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 -2.79 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