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FormFactor Inc (NAS:FORM)
Beneish M-Score
-3.26 (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 -3.26 suggests that the company is not a manipulator.

FORM' s 10-Year Beneish M-Score Range
Min: -4.66   Max: 11.02
Current: -3.26

-4.66
11.02

During the past 13 years, the highest Beneish M-Score of FormFactor Inc was 11.02. The lowest was -4.66. And the median was -2.20.


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 * 0.8139+0.528 * 0.7947+0.404 * 0.9546+0.892 * 1.1962+0.115 * 0.6806
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.8067+4.679 * -0.1437-0.327 * 0.9361
=-3.26

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

This Year (Mar14) TTM:Last Year (Mar13) TTM:
Accounts Receivable was $37.8 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.
Net Income was -12.711 + -18.789 + -10.714 + -8.407 = $-50.6 Mil.
Non Operating Income was -0.066 + 0.082 + -0.091 + 0.209 = $0.1 Mil.
Cash Flow from Operations was -6.876 + -3.248 + 3.041 + 4.072 = $-3.0 Mil.
Accounts Receivable was $38.9 Mil.
Revenue was 52.62 + 47.654 + 41.262 + 54.813 = $196.3 Mil.
Gross Profit was 9.075 + -3.144 + 8.152 + 16.167 = $30.3 Mil.
Total Current Assets was $230.8 Mil.
Total Assets was $379.0 Mil.
Property, Plant and Equipment(Net PPE) was $42.1 Mil.
Depreciation, Depletion and Amortization(DDA) was $21.5 Mil.
Selling, General & Admin. Expense(SGA) was $52.7 Mil.
Total Current Liabilities was $45.9 Mil.
Long-Term Debt was $0.2 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)
=(37.839 / 234.872) / (38.867 / 196.349)
=0.16110477 / 0.19794855
=0.8139

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)
=(4.258 / 196.349) / (12.325 / 234.872)
=0.15406241 / 0.1938673
=0.7947

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 - (213.304 + 30.049) / 332.178) / (1 - (230.804 + 42.054) / 379.027)
=0.26740181 / 0.28010933
=0.9546

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
=234.872 / 196.349
=1.1962

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))
=(21.465 / (21.465 + 42.054)) / (29.633 / (29.633 + 30.049))
=0.33793038 / 0.49651486
=0.6806

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)
=(50.853 / 234.872) / (52.701 / 196.349)
=0.21651368 / 0.26840473
=0.8067

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 + 37.799) / 332.178) / ((0.205 + 45.869) / 379.027)
=0.1137914 / 0.12155862
=0.9361

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
=(-50.621 - 0.134 - -3.011) / 332.178
=-0.1437

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 -3.26 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 0.70341.31350.79841.04711.95331.37330.36530.52852.41690.6905
GMI 1.00571.0820.90180.93943.093928.5089-0.5023-0.09730.87240.7769
AQI 0.59041.85370.59892.2761.42520.48021.5111.07129.80090.9821
SGI 1.80831.3361.55461.25180.45480.64391.39330.8981.05441.2968
DEPI 1.90590.62570.8851.11890.77120.87930.58291.82420.87070.6004
SGAI 0.85331.03361.0521.03352.2621.27940.6150.77390.99970.8335
LVGI 1.26361.36950.68430.86520.89821.15791.00110.76421.53660.9665
TATA -0.0363-0.017-0.0696-0.0145-0.0724-0.1562-0.2567-0.0985-0.0272-0.1541
M-score -2.32-1.75-2.63-1.74-1.3611.02-4.48-3.812.04-3.35

FormFactor Inc Quarterly Data

Dec11Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14
DSRI 0.52851.08121.02590.65852.41691.46571.23051.94790.69050.8139
GMI -0.09740.16940.35611.09580.87240.83441.06450.96450.77690.7947
AQI 1.07121.10310.91250.97019.800910.066310.05479.82670.98210.9546
SGI 0.8980.86470.96470.88031.05441.19941.18791.43161.29681.1962
DEPI 1.82421.61431.40161.08070.87070.70470.58920.52240.60040.6806
SGAI 0.77390.85180.87741.06890.99970.96641.00370.84620.83350.8067
LVGI 0.76421.12011.28211.06291.53661.311.13291.4510.96650.9361
TATA -0.0985-0.0847-0.0945-0.116-0.0272-0.0486-0.0704-0.0695-0.1541-0.1437
M-score -3.81-3.26-3.33-3.432.041.341.171.82-3.35-3.26
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