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KLA-Tencor Corp (NAS:KLAC)
Beneish M-Score
-2.55 (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 -2.55 suggests that the company is not a manipulator.

KLAC' s 10-Year Beneish M-Score Range
Min: -4.36   Max: -0.16
Current: -2.55

-4.36
-0.16

During the past 13 years, the highest Beneish M-Score of KLA-Tencor Corp was -0.16. The lowest was -4.36. And the median was -2.58.


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 * 0.9615+0.528 * 0.993+0.404 * 0.9869+0.892 * 1.048+0.115 * 1.0305
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9515+4.679 * -0.018-0.327 * 0.9779
=-2.55

* 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 $444 Mil.
Revenue was 642.901 + 734.343 + 831.599 + 705.129 = $2,914 Mil.
Gross Profit was 354.434 + 407.678 + 488.773 + 419.315 = $1,670 Mil.
Total Current Assets was $4,369 Mil.
Total Assets was $5,302 Mil.
Property, Plant and Equipment(Net PPE) was $330 Mil.
Depreciation, Depletion and Amortization(DDA) was $84 Mil.
Selling, General & Admin. Expense(SGA) was $388 Mil.
Total Current Liabilities was $805 Mil.
Long-Term Debt was $748 Mil.
Net Income was 72.233 + 128.731 + 203.581 + 139.246 = $544 Mil.
Non Operating Income was 0 + 2.648 + 0 + 0 = $3 Mil.
Cash Flow from Operations was 34.926 + 248.64 + 237.727 + 115.271 = $637 Mil.
Accounts Receivable was $441 Mil.
Revenue was 658.337 + 720.032 + 729.029 + 673.011 = $2,780 Mil.
Gross Profit was 380.68 + 413.228 + 419.521 + 369.096 = $1,583 Mil.
Total Current Assets was $4,355 Mil.
Total Assets was $5,284 Mil.
Property, Plant and Equipment(Net PPE) was $320 Mil.
Depreciation, Depletion and Amortization(DDA) was $84 Mil.
Selling, General & Admin. Expense(SGA) was $389 Mil.
Total Current Liabilities was $835 Mil.
Long-Term Debt was $748 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)
=(444.048 / 2913.972) / (440.674 / 2780.409)
=0.15238582 / 0.15849251
=0.9615

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)
=(407.678 / 2780.409) / (354.434 / 2913.972)
=0.56916986 / 0.57316954
=0.993

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 - (4368.537 + 329.959) / 5301.572) / (1 - (4354.738 + 319.837) / 5283.552)
=0.11375418 / 0.11525902
=0.9869

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
=2913.972 / 2780.409
=1.048

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))
=(84.155 / (84.155 + 319.837)) / (83.594 / (83.594 + 329.959))
=0.20830858 / 0.20213612
=1.0305

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)
=(388.055 / 2913.972) / (389.123 / 2780.409)
=0.13317046 / 0.13995171
=0.9515

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)
=((748.054 + 804.837) / 5301.572) / ((747.511 + 835.11) / 5283.552)
=0.29291142 / 0.29953732
=0.9779

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
=(543.791 - 2.648 - 636.564) / 5301.572
=-0.018

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 -2.55 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

Jun05Jun06Jun07Jun08Jun09Jun10Jun11Jun12Jun13Jun14
DSRI 0.64161.32941.00220.91730.70781.74870.75991.20350.83470.9117
GMI 0.94191.0760.9661.03371.2660.7810.91481.03911.02830.9751
AQI 0.36411.39311.53491.4060.84720.83920.74290.81350.92360.941
SGI 1.39320.9931.3190.92330.60281.19771.74390.9990.89621.0305
DEPI 1.1631.040.67180.84780.82581.17851.07561.00581.1181.1088
SGAI 0.86571.42650.91620.98491.47470.72680.58621.00981.16110.9632
LVGI 0.90750.93721.05961.5061.03751.10860.86610.90630.96410.9752
TATA -0.01020.0134-0.0209-0.0688-0.1992-0.0639-0.0057-0.0364-0.07-0.0359
M-score -2.72-1.97-2.14-2.94-4.07-2.06-2.09-2.49-3.07-2.71

KLA-Tencor Corp Quarterly Data

Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14
DSRI 1.20351.23691.12780.74850.83470.9131.05111.26990.91170.9615
GMI 1.03911.02781.03171.01931.02831.01530.98550.97870.97510.993
AQI 0.81350.81360.86750.88860.92360.91850.8840.92620.9410.9869
SGI 0.9990.94130.98780.95060.89620.8980.89950.96681.03051.048
DEPI 1.00581.02991.05531.08781.1181.16881.18621.16211.10881.0305
SGAI 1.00981.06321.00731.09051.16111.15311.15731.04210.96320.9515
LVGI 0.90630.93380.89940.91930.96410.98911.02110.98790.97520.9779
TATA -0.0364-0.053-0.0322-0.0683-0.07-0.0617-0.0609-0.0214-0.0359-0.018
M-score -2.49-2.61-2.52-3.09-3.07-2.97-2.87-2.39-2.71-2.55
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