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KLA-Tencor Corporation (NAS:KLAC)
Beneish M-Score
-2.96 (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.

KLA-Tencor Corporation has a M-score of -2.96 suggests that the company is not a manipulator.

KLAC' s 10-Year Beneish M-Score Range
Min: -4.15   Max: -0.16
Current: -2.96

-4.15
-0.16

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.


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 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
=-2.96

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

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

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)
=(573.077 / 2812.527) / (665.7 / 3126.706)
=0.20375876 / 0.21290777
=0.957

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)
=(380.68 / 3126.706) / (419.315 / 2812.527)
=0.57208897 / 0.58052563
=0.9855

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 - (4507.534 + 325.856) / 5440.734) / (1 - (4136.3 + 292.394) / 5068.763)
=0.11162906 / 0.12627716
=0.884

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
=2812.527 / 3126.706
=0.8995

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))
=0.238591 / 0.20113166
=1.1862

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)
=0.13924417 / 0.12032311
=1.1573

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)
=0.30798161 / 0.30162014
=1.0211

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
=(551.595 - 0.136 - 882.871) / 5440.734
=-0.0609

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.


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.

KLA-Tencor Corporation Annual Data

Jun04Jun05Jun06Jun07Jun08Jun09Jun10Jun11Jun12Jun13
DSRI 1.47360.64291.32731.00220.91730.70781.93910.75551.12740.848
GMI 0.90720.93331.06720.9661.03371.2660.7810.91481.03911.0283
AQI 1.16160.40821.24281.53491.4060.84720.83920.74290.81350.9236
SGI 1.13161.39050.99461.3190.92330.60281.19771.74390.9990.8962
DEPI 0.87071.17461.02980.67180.84780.82581.17851.07561.00581.118
SGAI 0.94170.83391.36160.91620.98491.47470.72680.58621.00981.1611
LVGI 1.13410.90.9450.99281.60731.06341.04480.89660.90630.9641
TATA -0.0407-0.01550.0134-0.0209-0.0688-0.2002-0.059-0.0037-0.0357-0.07
M-score -2.15-2.73-2.03-2.11-2.98-4.08-1.84-2.09-2.56-3.06

KLA-Tencor Corporation Quarterly Data

Sep11Dec11Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13
DSRI 0.62390.80420.93371.12741.20191.23870.69910.8480.94250.957
GMI 0.97621.00481.03371.03911.02781.03171.01931.02831.01530.9855
AQI 0.75090.76550.79370.81350.81360.86750.88860.92360.91850.884
SGI 1.52251.27311.1160.9990.94130.98780.95060.89620.8980.8995
DEPI 1.01980.99520.9851.00581.02991.05531.08781.1181.16881.1862
SGAI 0.66330.82440.90731.00981.06321.00731.09051.16111.15311.1573
LVGI 0.860.90780.9110.90630.93380.89940.91930.96410.98911.0211
TATA -0.0207-0.0364-0.0392-0.0357-0.0524-0.0315-0.0676-0.07-0.0617-0.0609
M-score -2.46-2.62-2.64-2.56-2.64-2.42-3.13-3.06-2.94-2.96
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