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FormFactor Inc (NAS:FORM)
Beneish M-Score
-3.18 (As of Today)

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.

FormFactor Inc has a M-score of -3.18 suggests that the company is not a manipulator.

FORM' s 10-Year Beneish M-Score Range
Min: -4.52   Max: 10.98
Current: -3.18

-4.52
10.98

During the past 13 years, the highest Beneish M-Score of FormFactor Inc was 10.98. The lowest was -4.52. And the median was -2.44.


Definition

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 FormFactor 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 * 0.9182+0.528 * 0.625+0.404 * 0.7772+0.892 * 1.2066+0.115 * 0.9374
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.8314+4.679 * -0.1152-0.327 * 1.0112
=-3.18

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.

This Year (Mar15) TTM:Last Year (Mar14) TTM:
Accounts Receivable was $41.1 Mil.
Revenue was 70.829 + 71.285 + 73.933 + 67.352 = $283.4 Mil.
Gross Profit was 22.789 + 20.948 + 24.142 + 20.024 = $87.9 Mil.
Total Current Assets was $245.5 Mil.
Total Assets was $341.5 Mil.
Property, Plant and Equipment(Net PPE) was $25.1 Mil.
Depreciation, Depletion and Amortization(DDA) was $28.2 Mil.
Selling, General & Admin. Expense(SGA) was $51.0 Mil.
Total Current Liabilities was $39.3 Mil.
Long-Term Debt was $0.0 Mil.
Net Income was 0.783 + -1.871 + -0.277 + -4.326 = $-5.7 Mil.
Non Operating Income was 1.501 + 0.155 + 0.228 + -0.156 = $1.7 Mil.
Cash Flow from Operations was 7.389 + 12.244 + 5.936 + 6.355 = $31.9 Mil.
Accounts Receivable was $37.1 Mil.
Revenue was 55.959 + 48.546 + 67.634 + 62.733 = $234.9 Mil.
Gross Profit was 12.325 + 4.258 + 12.546 + 16.405 = $45.5 Mil.
Total Current Assets was $213.3 Mil.
Total Assets was $332.2 Mil.
Property, Plant and Equipment(Net PPE) was $30.0 Mil.
Depreciation, Depletion and Amortization(DDA) was $29.6 Mil.
Selling, General & Admin. Expense(SGA) was $50.9 Mil.
Total Current Liabilities was $37.8 Mil.
Long-Term Debt was $0.0 Mil.



1. DSRI = Days Sales in Receivables Index

Measured as the ratio of days’ sales in receivables in year t to year t-1.

A large increase in DSR could be indicative of revenue inflation.

DSRI=(Receivables_t / Revenue_t) / (Receivables_t-1 / Revenue_t-1)
=(41.055 / 283.399) / (37.057 / 234.872)
=0.14486643 / 0.1577753
=0.9182

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.

GMI=GrossMargin_t-1 / GrossMargin_t
=(GrossProfit_t-1 / Revenue_t-1) / (GrossProfit_t / Revenue_t)
=(20.948 / 234.872) / (22.789 / 283.399)
=0.1938673 / 0.31017399
=0.625

3. AQI = Asset Quality Index

AQI is the ratio of asset quality in year t to year t-1.

Asset quality is measured as the ratio of non-current assets other than plant, property and equipment to total assets.

AQI=(1 - (CurrentAssets_t + PPE_t) / TotalAssets_t) / (1 - (CurrentAssets_t-1 + PPE_t-1) / TotalAssets_t-1)
=(1 - (245.464 + 25.077) / 341.519) / (1 - (213.304 + 30.049) / 332.178)
=0.20783031 / 0.26740181
=0.7772

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.

SGI=Sales_t / Sales_t-1
=Revenue_t / Revenue_t-1
=283.399 / 234.872
=1.2066

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))
=(29.633 / (29.633 + 30.049)) / (28.244 / (28.244 + 25.077))
=0.49651486 / 0.52969749
=0.9374

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)
=(51.013 / 283.399) / (50.853 / 234.872)
=0.18000416 / 0.21651368
=0.8314

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)
=((0 + 39.296) / 341.519) / ((0 + 37.799) / 332.178)
=0.11506241 / 0.1137914
=1.0112

8. TATA = Total Accruals to Total Assets

Total accruals calculated as the change in working capital accounts other than cash less depreciation.

TATA=(IncomefromContinuingOperations_t - CashFlowsfromOperations_t) / TotalAssets_t
=(NetIncome_t - NonOperatingIncome_t - CashFlowsfromOperations_t) / TotalAssets_t
=(-5.691 - 1.728 - 31.924) / 341.519
=-0.1152

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.

FormFactor Inc has a M-score of -3.18 suggests that the company will not be a manipulator.


Related Terms

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


Historical Data

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.

FormFactor Inc Annual Data

Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14
DSRI 1.31350.79841.01721.081.33850.69780.49312.16610.8051.2896
GMI 1.0820.90180.93943.093928.5089-0.5023-0.09730.87240.77690.6333
AQI 1.85370.59892.2761.42520.48021.5111.07129.80090.98210.7852
SGI 1.3361.55461.25180.45480.64391.39330.8981.05441.29681.1598
DEPI 0.62570.8851.11890.77120.87930.58291.82420.87070.60040.8282
SGAI 1.03361.0521.03352.2621.27940.6150.77390.99970.83350.8325
LVGI 1.36950.68430.86520.89821.15791.00110.76421.53660.96651.2542
TATA -0.017-0.0696-0.0145-0.0724-0.1562-0.2567-0.0985-0.0272-0.1541-0.1075
M-score -1.75-2.63-1.77-2.1610.98-4.18-3.841.81-3.25-2.93

FormFactor Inc Quarterly Data

Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14Dec14Mar15
DSRI 2.16611.31541.1831.91550.8050.9260.91860.96791.28960.9182
GMI 0.87240.83441.06450.96450.77690.79470.72720.61190.63330.625
AQI 9.800910.066310.05479.82670.98210.95460.91520.86630.78520.7772
SGI 1.05441.19941.18791.43161.29681.19621.17241.06571.15981.2066
DEPI 0.87070.70470.58920.52240.60040.68060.77630.84170.82820.9374
SGAI 0.99970.96641.00370.84620.83350.80670.78890.85290.83250.8314
LVGI 1.53661.311.13291.4510.96650.93611.0610.96911.25421.0112
TATA -0.0272-0.0486-0.0704-0.0695-0.1541-0.1437-0.1352-0.1113-0.1075-0.1152
M-score 1.811.211.131.79-3.25-3.15-3.22-3.21-2.93-3.18
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