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FormFactor Inc (NAS:FORM)
Beneish M-Score
-3.21 (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 -3.21 suggests that the company is not a manipulator.

FORM' s 10-Year Beneish M-Score Range
Min: -4.52   Max: 10.98
Current: -3.21

-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 -2.43.


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 * 0.9679+0.528 * 0.6119+0.404 * 0.8663+0.892 * 1.0657+0.115 * 0.8417
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.8529+4.679 * -0.1113-0.327 * 0.9691
=-3.21

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

This Year (Sep14) TTM:Last Year (Sep13) TTM:
Accounts Receivable was $47.8 Mil.
Revenue was 73.933 + 67.352 + 55.959 + 48.546 = $245.8 Mil.
Gross Profit was 24.142 + 20.024 + 12.325 + 4.258 = $60.7 Mil.
Total Current Assets was $239.4 Mil.
Total Assets was $344.5 Mil.
Property, Plant and Equipment(Net PPE) was $26.6 Mil.
Depreciation, Depletion and Amortization(DDA) was $31.2 Mil.
Selling, General & Admin. Expense(SGA) was $50.9 Mil.
Total Current Liabilities was $46.5 Mil.
Long-Term Debt was $0.0 Mil.
Net Income was -0.277 + -4.326 + -12.711 + -18.789 = $-36.1 Mil.
Non Operating Income was 0.228 + -0.156 + -0.066 + 0.082 = $0.1 Mil.
Cash Flow from Operations was 5.936 + 6.355 + -6.876 + -3.248 = $2.2 Mil.
Accounts Receivable was $46.3 Mil.
Revenue was 67.634 + 62.733 + 52.62 + 47.654 = $230.6 Mil.
Gross Profit was 12.546 + 16.405 + 9.075 + -3.144 = $34.9 Mil.
Total Current Assets was $237.9 Mil.
Total Assets was $372.9 Mil.
Property, Plant and Equipment(Net PPE) was $36.9 Mil.
Depreciation, Depletion and Amortization(DDA) was $30.8 Mil.
Selling, General & Admin. Expense(SGA) was $56.0 Mil.
Total Current Liabilities was $51.9 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)
=(47.776 / 245.79) / (46.32 / 230.641)
=0.19437731 / 0.2008316
=0.9679

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)
=(20.024 / 230.641) / (24.142 / 245.79)
=0.15123937 / 0.24715814
=0.6119

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 - (239.394 + 26.61) / 344.531) / (1 - (237.869 + 36.945) / 372.94)
=0.22792434 / 0.26311471
=0.8663

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
=245.79 / 230.641
=1.0657

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))
=(30.759 / (30.759 + 36.945)) / (31.21 / (31.21 + 26.61))
=0.45431585 / 0.53977862
=0.8417

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)
=(50.914 / 245.79) / (56.015 / 230.641)
=0.20714431 / 0.24286662
=0.8529

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 + 46.46) / 344.531) / ((0 + 51.894) / 372.94)
=0.13484998 / 0.13914839
=0.9691

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
=(-36.103 - 0.088 - 2.167) / 344.531
=-0.1113

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 -3.21 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 0.70341.31350.79841.01721.081.33850.69780.49312.16610.805
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 -2.32-1.75-2.63-1.77-2.1610.98-4.18-3.841.81-3.25

FormFactor Inc Quarterly Data

Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14
DSRI 1.02580.65842.16611.31541.1831.91550.8050.9260.91860.9679
GMI 0.35611.09580.87240.83441.06450.96450.77690.79470.72720.6119
AQI 0.91250.97019.800910.066310.05479.82670.98210.95460.91520.8663
SGI 0.96470.88031.05441.19941.18791.43161.29681.19621.17241.0657
DEPI 1.40161.08070.87070.70470.58920.52240.60040.68060.77630.8417
SGAI 0.87741.06890.99970.96641.00370.84620.83350.80670.78890.8529
LVGI 1.28211.06291.53661.311.13291.4510.96650.93611.0610.9691
TATA -0.0945-0.116-0.0272-0.0486-0.0704-0.0695-0.1541-0.1437-0.1352-0.1113
M-score -3.33-3.431.811.211.131.79-3.25-3.15-3.22-3.21
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