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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: -30.32   Max: 6.29
Current: -3.24

-30.32
6.29

During the past 13 years, the highest Beneish M-Score of FormFactor Inc was 6.29. The lowest was -30.32. And the median was -2.30.


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 * 0.8995+0.528 * 0.7272+0.404 * 0.9152+0.892 * 1.1724+0.115 * 0.7763
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.7889+4.679 * -0.1352-0.327 * 1.061
=-3.24

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

This Year (Jun14) TTM:Last Year (Jun13) TTM:
Accounts Receivable was $42.7 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.
Net Income was -4.326 + -12.711 + -18.789 + -10.714 = $-46.5 Mil.
Non Operating Income was -0.156 + -0.066 + 0.082 + -0.091 = $-0.2 Mil.
Cash Flow from Operations was 6.355 + -6.876 + -3.248 + 3.041 = $-0.7 Mil.
Accounts Receivable was $40.5 Mil.
Revenue was 62.733 + 52.62 + 47.654 + 41.262 = $204.3 Mil.
Gross Profit was 16.405 + 9.075 + -3.144 + 8.152 = $30.5 Mil.
Total Current Assets was $231.6 Mil.
Total Assets was $372.3 Mil.
Property, Plant and Equipment(Net PPE) was $39.6 Mil.
Depreciation, Depletion and Amortization(DDA) was $26.1 Mil.
Selling, General & Admin. Expense(SGA) was $54.7 Mil.
Total Current Liabilities was $45.1 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)
=(42.744 / 239.491) / (40.532 / 204.269)
=0.17847852 / 0.19842463
=0.8995

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)
=(12.325 / 204.269) / (20.024 / 239.491)
=0.14925417 / 0.20523945
=0.7272

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 - (224.152 + 29.21) / 337.128) / (1 - (231.579 + 39.63) / 372.278)
=0.24846942 / 0.27148797
=0.9152

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
=239.491 / 204.269
=1.1724

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))
=(26.054 / (26.054 + 39.63)) / (30.522 / (30.522 + 29.21))
=0.39665672 / 0.51098239
=0.7763

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)
=(50.557 / 239.491) / (54.657 / 204.269)
=0.21110188 / 0.26757364
=0.7889

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 + 43.324) / 337.128) / ((0.039 + 45.051) / 372.278)
=0.12850905 / 0.12111916
=1.061

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
=(-46.54 - -0.231 - -0.728) / 337.128
=-0.1352

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

Dec04Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13
DSRI 0.70341.31350.79841.01722.01081.37330.36530.52852.41690.6905
GMI 1.00571.0820.87420.96913.0939-49.78410.2876-0.09730.87240.7769
AQI 0.73081.85370.59562.28861.42520.48021.5111.07129.80090.9821
SGI 1.80831.3361.55461.25180.45480.64391.39330.8981.05441.2968
DEPI 1.90590.62570.8851.11890.77120.87520.58561.82420.87070.6004
SGAI 0.85331.05041.03521.03352.2621.27940.6150.77390.99970.8335
LVGI 1.25721.36950.68310.86670.89821.15791.00110.76421.53660.9665
TATA -0.0363-0.017-0.0641-0.0145-0.0724-0.1562-0.2567-0.0985-0.0272-0.1541
M-score -2.26-1.76-2.62-1.75-1.31-30.32-4.07-3.812.04-3.35

FormFactor Inc Quarterly Data

Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14
DSRI 1.08121.02590.65852.41691.46571.23051.94790.69050.81390.8995
GMI 0.12840.35611.09580.87240.83441.06450.96450.77690.79470.7272
AQI 1.10310.91250.97019.800910.066310.05479.82670.98210.95460.9152
SGI 0.86470.96470.88031.05441.19941.18791.43161.29681.19621.1724
DEPI 1.61031.40161.08070.87070.70470.58920.52240.60040.68060.7763
SGAI 0.85180.87741.06890.99970.96641.00370.84620.83350.80670.7889
LVGI 1.12011.28211.06291.53661.311.13291.4510.96650.93611.061
TATA -0.0847-0.0945-0.116-0.0272-0.0486-0.0704-0.0695-0.1541-0.1437-0.1352
M-score -3.28-3.33-3.432.041.341.171.82-3.35-3.26-3.24
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