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KLA-Tencor Corp (NAS:KLAC)
Beneish M-Score
-2.99 (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 Corp has a M-score of -2.99 suggests that the company is not a manipulator.

KLAC' s 10-Year Beneish M-Score Range
Min: -4.09   Max: -1.95
Current: -2.99

-4.09
-1.95

During the past 13 years, the highest Beneish M-Score of KLA-Tencor Corp was -1.95. The lowest was -4.09. And the median was -2.64.


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 Corp 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 * 1.2366+0.528 * 1.0193+0.404 * 1.1237+0.892 * 0.9606+0.115 * 0.9861
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.1004+4.679 * -0.022-0.327 * 2.919
=-2.99

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

This Year (Jun15) TTM:Last Year (Jun14) TTM:
Accounts Receivable was $585 Mil.
Revenue was 756.332 + 738.459 + 676.357 + 642.901 = $2,814 Mil.
Gross Profit was 433.065 + 418.177 + 393.144 + 354.434 = $1,599 Mil.
Total Current Assets was $3,905 Mil.
Total Assets was $4,826 Mil.
Property, Plant and Equipment(Net PPE) was $315 Mil.
Depreciation, Depletion and Amortization(DDA) was $81 Mil.
Selling, General & Admin. Expense(SGA) was $407 Mil.
Total Current Liabilities was $1,002 Mil.
Long-Term Debt was $3,173 Mil.
Net Income was 142.019 + 131.638 + 20.268 + 72.233 = $366 Mil.
Non Operating Income was -2.076 + 0 + -131.669 + 0 = $-134 Mil.
Cash Flow from Operations was 317.479 + 242.417 + 11.084 + 34.926 = $606 Mil.
Accounts Receivable was $493 Mil.
Revenue was 734.343 + 831.599 + 705.129 + 658.337 = $2,929 Mil.
Gross Profit was 407.678 + 488.773 + 419.315 + 380.68 = $1,696 Mil.
Total Current Assets was $4,586 Mil.
Total Assets was $5,536 Mil.
Property, Plant and Equipment(Net PPE) was $330 Mil.
Depreciation, Depletion and Amortization(DDA) was $83 Mil.
Selling, General & Admin. Expense(SGA) was $385 Mil.
Total Current Liabilities was $896 Mil.
Long-Term Debt was $745 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)
=(585.494 / 2814.049) / (492.863 / 2929.408)
=0.20806105 / 0.16824662
=1.2366

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)
=(418.177 / 2929.408) / (433.065 / 2814.049)
=0.57910882 / 0.56815642
=1.0193

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 - (3904.576 + 314.591) / 4826.012) / (1 - (4586.095 + 330.263) / 5535.846)
=0.12574461 / 0.11190485
=1.1237

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
=2814.049 / 2929.408
=0.9606

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))
=(83.072 / (83.072 + 330.263)) / (80.536 / (80.536 + 314.591))
=0.20097983 / 0.20382307
=0.9861

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)
=(406.864 / 2814.049) / (384.907 / 2929.408)
=0.14458313 / 0.13139412
=1.1004

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)
=((3173.435 + 1001.763) / 4826.012) / ((745.101 + 895.611) / 5535.846)
=0.86514455 / 0.29637963
=2.919

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
=(366.158 - -133.745 - 605.906) / 4826.012
=-0.022

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 Corp has a M-score of -2.99 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 Corp Annual Data

Jun06Jun07Jun08Jun09Jun10Jun11Jun12Jun13Jun14Jun15
DSRI 1.32731.00220.91730.70781.74870.75991.20350.83470.91171.2366
GMI 1.06720.9661.03371.2660.7810.91481.03911.02830.97511.0193
AQI 1.24281.53491.4060.84720.83920.74290.81350.92360.93831.1237
SGI 0.99461.3190.92330.60281.19771.74390.9990.89621.03050.9606
DEPI 1.02980.67180.84780.82581.17851.07561.00581.1181.10880.9861
SGAI 1.36160.91620.98491.47470.72680.58621.00981.16110.96321.1004
LVGI 0.9450.99281.60731.06341.04480.89660.90630.96410.9742.919
TATA 0.0134-0.0209-0.0688-0.2002-0.059-0.0037-0.0357-0.07-0.0359-0.022
M-score -2.03-2.11-2.98-4.08-2.02-2.09-2.49-3.07-2.71-2.99

KLA-Tencor Corp Quarterly Data

Mar13Jun13Sep13Dec13Mar14Jun14Sep14Dec14Mar15Jun15
DSRI 0.74850.83470.9131.05111.26990.91170.96151.07521.18251.2366
GMI 1.01931.02831.01530.98550.97870.97510.9931.01881.03611.0193
AQI 0.88860.92360.91850.8840.92620.93830.98691.10961.11121.1237
SGI 0.95060.89620.8980.89950.96681.03051.0481.02580.95780.9606
DEPI 1.08781.1181.16881.18621.16211.10881.03050.98770.97740.9861
SGAI 1.09051.16111.15311.15731.04210.96320.95150.98611.08391.1004
LVGI 0.91930.96410.98911.02110.98790.9740.97792.70242.85792.919
TATA -0.0676-0.07-0.0617-0.0609-0.0214-0.0359-0.0180.0043-0.0113-0.022
M-score -3.09-3.07-2.97-2.87-2.39-2.71-2.55-2.87-2.96-2.99
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