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FormFactor Inc (NAS:FORM)
Beneish M-Score
-3.24 (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 -3.24 suggests that the company is not a manipulator.

FORM' s 10-Year Beneish M-Score Range
Min: -4.52   Max: 10.98
Current: -3.24

-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 -2.54.


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 * 0.8657+0.528 * 0.6526+0.404 * 0.7807+0.892 * 1.2106+0.115 * 0.9883
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.8039+4.679 * -0.1215-0.327 * 1.0499
=-3.24

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

This Year (Jun15) TTM:Last Year (Jun14) TTM:
Accounts Receivable was $44.0 Mil.
Revenue was 73.885 + 70.829 + 71.285 + 73.933 = $289.9 Mil.
Gross Profit was 23.303 + 22.789 + 20.948 + 24.142 = $91.2 Mil.
Total Current Assets was $256.6 Mil.
Total Assets was $348.8 Mil.
Property, Plant and Equipment(Net PPE) was $24.5 Mil.
Depreciation, Depletion and Amortization(DDA) was $26.2 Mil.
Selling, General & Admin. Expense(SGA) was $49.2 Mil.
Total Current Liabilities was $47.1 Mil.
Long-Term Debt was $0.0 Mil.
Net Income was 0.838 + 0.783 + -1.871 + -0.277 = $-0.5 Mil.
Non Operating Income was 0.1 + 1.501 + 0.155 + 0.228 = $2.0 Mil.
Cash Flow from Operations was 14.281 + 7.389 + 12.244 + 5.936 = $39.9 Mil.
Accounts Receivable was $42.0 Mil.
Revenue was 67.352 + 55.959 + 48.546 + 67.634 = $239.5 Mil.
Gross Profit was 20.024 + 12.325 + 4.258 + 12.546 = $49.2 Mil.
Total Current Assets was $224.2 Mil.
Total Assets was $337.1 Mil.
Property, Plant and Equipment(Net PPE) was $29.2 Mil.
Depreciation, Depletion and Amortization(DDA) was $30.5 Mil.
Selling, General & Admin. Expense(SGA) was $50.6 Mil.
Total Current Liabilities was $43.3 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)
=(43.979 / 289.932) / (41.962 / 239.491)
=0.15168729 / 0.17521326
=0.8657

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)
=(22.789 / 239.491) / (23.303 / 289.932)
=0.20523945 / 0.31449443
=0.6526

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 - (256.614 + 24.485) / 348.753) / (1 - (224.152 + 29.21) / 337.128)
=0.1939883 / 0.24846942
=0.7807

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
=289.932 / 239.491
=1.2106

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))
=(30.522 / (30.522 + 29.21)) / (26.214 / (26.214 + 24.485))
=0.51098239 / 0.51705162
=0.9883

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)
=(49.203 / 289.932) / (50.557 / 239.491)
=0.16970531 / 0.21110188
=0.8039

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 + 47.055) / 348.753) / ((0 + 43.324) / 337.128)
=0.13492357 / 0.12850905
=1.0499

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
=(-0.527 - 1.984 - 39.85) / 348.753
=-0.1215

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 -3.24 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

Mar13Jun13Sep13Dec13Mar14Jun14Sep14Dec14Mar15Jun15
DSRI 1.31541.1831.91550.8050.9260.91860.96791.28960.91820.8657
GMI 0.83441.06450.96450.77690.79470.72720.61190.63330.6250.6526
AQI 10.066310.05479.82670.98210.95460.91520.86630.78520.77720.7807
SGI 1.19941.18791.43161.29681.19621.17241.06571.15981.20661.2106
DEPI 0.70470.58920.52240.60040.68060.77630.84170.82820.93740.9883
SGAI 0.96641.00370.84620.83350.80670.78890.85290.83250.83140.8039
LVGI 1.311.13291.4510.96650.93611.0610.96911.25421.01121.0499
TATA -0.0486-0.0704-0.0695-0.1541-0.1437-0.1352-0.1113-0.1075-0.1152-0.1215
M-score 1.211.131.79-3.25-3.15-3.22-3.21-2.93-3.18-3.24
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