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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 * 1.0234||+||0.528 * 0.9694||+||0.404 * 0.9175||+||0.892 * 1.0823||+||0.115 * 0.9778|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0078||+||4.679 * -0.0195||-||0.327 * 0.9728|
|This Year (Jun16) TTM:||Last Year (Jun15) TTM:|
|Accounts Receivable was $3,078 Mil.|
Revenue was 5688 + 5527 + 5536 + 5723 = $22,474 Mil.
Gross Profit was 4638 + 4509 + 4465 + 4689 = $18,301 Mil.
Total Current Assets was $42,947 Mil.
Total Assets was $75,471 Mil.
Property, Plant and Equipment(Net PPE) was $4,884 Mil.
Depreciation, Depletion and Amortization(DDA) was $2,108 Mil.
Selling, General & Admin. Expense(SGA) was $5,155 Mil.
Total Current Liabilities was $10,830 Mil.
Long-Term Debt was $27,928 Mil.
Net Income was 1870 + 1900 + 1800 + 1863 = $7,433 Mil.
Non Operating Income was 0 + 0 + 0 + 0 = $0 Mil.
Cash Flow from Operations was 2677 + 1915 + 2060 + 2251 = $8,903 Mil.
|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.
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 / 22474)||/||(2779 / 20765)|
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)|
|=||(16392 / 20765)||/||(18301 / 22474)|
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 - (42947 + 4884) / 75471)||/||(1 - (37736 + 5050) / 71209)|
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))|
|=||(2111 / (2111 + 5050))||/||(2108 / (2108 + 4884))|
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 / 22474)||/||(4726 / 20765)|
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)|
|=||((27928 + 10830) / 75471)||/||((30702 + 6891) / 71209)|
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|
|=||(7433 - 0||-||8903)||/||75471|
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