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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.
KLA-Tencor Corporation has a M-score of -2.96 suggests that the company is not a manipulator.
During the past 13 years, the highest Beneish M-Score of KLA-Tencor Corporation was -0.16. The lowest was -4.15. And the median was -2.62.
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 KLA-Tencor Corporation 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 * 0.957||+||0.528 * 0.9855||+||0.404 * 0.884||+||0.892 * 0.8995||+||0.115 * 1.1862|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.1573||+||4.679 * -0.0609||-||0.327 * 1.0211|
|This Year (Dec13) TTM:||Last Year (Dec12) TTM:|
|Accounts Receivable was $573 Mil.|
Revenue was 705.129 + 658.337 + 720.032 + 729.029 = $2,813 Mil.
Gross Profit was 419.315 + 380.68 + 413.228 + 419.521 = $1,633 Mil.
Total Current Assets was $4,508 Mil.
Total Assets was $5,441 Mil.
Property, Plant and Equipment(Net PPE) was $326 Mil.
Depreciation, Depletion and Amortization(DDA) was $82 Mil.
Selling, General & Admin. Expense(SGA) was $392 Mil.
Total Current Liabilities was $928 Mil.
Long-Term Debt was $748 Mil.
Net Income was 139.246 + 111.197 + 134.77 + 166.382 = $552 Mil.
Non Operating Income was 0 + 0 + 0.136 + 0 = $0 Mil.
Cash Flow from Operations was 115.271 + 177.248 + 175.569 + 414.783 = $883 Mil.
|Accounts Receivable was $666 Mil.
Revenue was 673.011 + 720.709 + 892.465 + 840.521 = $3,127 Mil.
Gross Profit was 369.096 + 403.484 + 530.802 + 485.372 = $1,789 Mil.
Total Current Assets was $4,136 Mil.
Total Assets was $5,069 Mil.
Property, Plant and Equipment(Net PPE) was $292 Mil.
Depreciation, Depletion and Amortization(DDA) was $92 Mil.
Selling, General & Admin. Expense(SGA) was $376 Mil.
Total Current Liabilities was $782 Mil.
Long-Term Debt was $747 Mil.
1. DSRI = Days Sales in Receivables Index
A large increase in DSR could be indicative of revenue inflation.
|DSRI||=||(Receivables_t / Revenue_t)||/||(Receivables_t-1 / Revenue_t-1)|
|=||(573.077 / 2812.527)||/||(665.7 / 3126.706)|
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.
|=||(GrossProfit_t-1 / Revenue_t-1)||/||(GrossProfit_t / Revenue_t)|
|=||(380.68 / 3126.706)||/||(419.315 / 2812.527)|
3. AQI = Asset Quality Index
AQI is the ratio of asset quality in year t to year t-1.
|AQI||=||(1 - (CurrentAssets_t + PPE_t) / TotalAssets_t)||/||(1 - (CurrentAssets_t-1 + PPE_t-1) / TotalAssets_t-1)|
|=||(1 - (4507.534 + 325.856) / 5440.734)||/||(1 - (4136.3 + 292.394) / 5068.763)|
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.
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))|
|=||(91.623 / (91.623 + 292.394))||/||(82.041 / (82.041 + 325.856))|
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)|
|=||(391.628 / 2812.527)||/||(376.215 / 3126.706)|
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)|
|=||((747.647 + 927.999) / 5440.734)||/||((747.104 + 781.737) / 5068.763)|
8. TATA = Total Accruals to Total Assets
Total accruals calculated as the change in working capital accounts other than cash less depreciation.
|=||(NetIncome_t - NonOperatingIncome_t||-||CashFlowsfromOperations_t)||/||TotalAssets_t|
|=||(551.595 - 0.136||-||882.871)||/||5440.734|
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.
KLA-Tencor Corporation has a M-score of -2.96 suggests that the company will not be a manipulator.
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
KLA-Tencor Corporation Annual Data
KLA-Tencor Corporation Quarterly Data