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KLA-Tencor Corp (NAS:KLAC)
Beneish M-Score
-2.65 (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 -2.65 suggests that the company is not a manipulator.

KLAC' s Beneish M-Score Range Over the Past 10 Years
Min: -4.23   Max: -0.16
Current: -2.65

-4.23
-0.16

During the past 13 years, the highest Beneish M-Score of KLA-Tencor Corp was -0.16. The lowest was -4.23. 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 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 * 0.9789+0.528 * 0.9507+0.404 * 0.9813+0.892 * 1.0106+0.115 * 1.0224
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9303+4.679 * -0.0303-0.327 * 1.0053
=-2.65

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

This Year (Mar16) TTM:Last Year (Mar15) TTM:
Accounts Receivable was $625 Mil.
Revenue was 712.433 + 710.245 + 642.644 + 756.332 = $2,822 Mil.
Gross Profit was 437.834 + 429.265 + 372.4 + 433.065 = $1,673 Mil.
Total Current Assets was $3,906 Mil.
Total Assets was $4,782 Mil.
Property, Plant and Equipment(Net PPE) was $288 Mil.
Depreciation, Depletion and Amortization(DDA) was $72 Mil.
Selling, General & Admin. Expense(SGA) was $377 Mil.
Total Current Liabilities was $998 Mil.
Long-Term Debt was $3,097 Mil.
Net Income was 175.777 + 152.207 + 104.897 + 142.019 = $575 Mil.
Non Operating Income was 5.988 + 0 + 0 + -9.415 = $-3 Mil.
Cash Flow from Operations was 111.497 + 100.324 + 193.782 + 317.479 = $723 Mil.
Accounts Receivable was $632 Mil.
Revenue was 738.459 + 676.357 + 642.901 + 734.343 = $2,792 Mil.
Gross Profit was 418.177 + 393.144 + 354.434 + 407.678 = $1,573 Mil.
Total Current Assets was $3,967 Mil.
Total Assets was $4,902 Mil.
Property, Plant and Equipment(Net PPE) was $321 Mil.
Depreciation, Depletion and Amortization(DDA) was $83 Mil.
Selling, General & Admin. Expense(SGA) was $401 Mil.
Total Current Liabilities was $977 Mil.
Long-Term Debt was $3,199 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)
=(624.818 / 2821.654) / (631.608 / 2792.06)
=0.22143679 / 0.22621577
=0.9789

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)
=(1573.433 / 2792.06) / (1672.564 / 2821.654)
=0.56353839 / 0.59276013
=0.9507

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 - (3906.473 + 287.874) / 4782.102) / (1 - (3967.111 + 321.081) / 4902.22)
=0.12290725 / 0.12525509
=0.9813

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
=2821.654 / 2792.06
=1.0106

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))
=(82.58 / (82.58 + 321.081)) / (72.01 / (72.01 + 287.874))
=0.2045776 / 0.20009225
=1.0224

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)
=(377.341 / 2821.654) / (401.341 / 2792.06)
=0.13373043 / 0.14374369
=0.9303

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)
=((3097.306 + 997.692) / 4782.102) / ((3199.299 + 976.615) / 4902.22)
=0.85631758 / 0.85184141
=1.0053

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
=(574.9 - -3.427 - 723.082) / 4782.102
=-0.0303

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 -2.65 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 1.32941.00220.91730.70781.74870.75991.20350.83470.91171.2366
GMI 1.0760.9661.03371.2660.7810.91481.03911.02830.97511.0193
AQI 1.24281.53491.4060.84720.83920.74290.81350.92360.93831.1237
SGI 0.9931.3190.92330.60281.19771.74390.9990.89621.03050.9606
DEPI 1.03840.67180.84780.82581.17851.07561.00581.1181.10880.9861
SGAI 1.42650.91620.98491.47470.72680.58621.00981.16110.96321.1004
LVGI 0.9450.99281.60731.06341.04480.89660.90630.96410.9742.919
TATA 0.0134-0.0209-0.0688-0.1992-0.0639-0.0037-0.0364-0.07-0.0359-0.022
M-score -2.03-2.11-2.98-4.08-2.04-2.09-2.49-3.07-2.71-2.99

KLA-Tencor Corp Quarterly Data

Dec13Mar14Jun14Sep14Dec14Mar15Jun15Sep15Dec15Mar16
DSRI 1.05111.26990.91170.96151.07521.18251.23661.07470.68460.9789
GMI 0.98550.97870.97510.9931.01881.03611.01930.99750.98170.9507
AQI 0.8840.92620.93830.98691.10961.11121.12371.14041.05130.9813
SGI 0.89950.96681.03051.0481.02580.95780.96060.96560.9871.0106
DEPI 1.18621.16211.10881.03050.98770.97740.98610.9760.97951.0224
SGAI 1.15731.04210.96320.95150.98611.08391.10041.05920.99360.9303
LVGI 1.02110.98790.9740.97792.70242.85792.9193.03681.05361.0053
TATA -0.0609-0.0214-0.0359-0.0180.0043-0.0117-0.0209-0.0496-0.0691-0.0303
M-score -2.87-2.39-2.71-2.55-2.87-2.97-2.98-3.30-3.11-2.65
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