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GuruFocus has detected 3 Warning Signs with B/E Aerospace Inc $BEAV.
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B/E Aerospace Inc (NAS:BEAV)
Beneish M-Score
-2.05 (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.

B/E Aerospace Inc has a M-score of -2.41 suggests that the company is not a manipulator.

BEAV' s Beneish M-Score Range Over the Past 10 Years
Min: -3.1   Max: -1.46
Current: -2.05

-3.1
-1.46

During the past 13 years, the highest Beneish M-Score of B/E Aerospace Inc was -1.46. The lowest was -3.10. And the median was -2.28.


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 B/E Aerospace Inc 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 * 1.0747+0.528 * 1.0093+0.404 * 0.9511+0.892 * 1.0566+0.115 * 1.1339
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.8587+4.679 * -0.0175-0.327 * 0.9822
=-2.41

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

This Year (Sep16) TTM:Last Year (Sep15) TTM:
Accounts Receivable was $432 Mil.
Revenue was 732.7 + 753.1 + 716.7 + 659.2 = $2,862 Mil.
Gross Profit was 275.2 + 305.3 + 280.1 + 262.8 = $1,123 Mil.
Total Current Assets was $1,871 Mil.
Total Assets was $3,349 Mil.
Property, Plant and Equipment(Net PPE) was $392 Mil.
Depreciation, Depletion and Amortization(DDA) was $84 Mil.
Selling, General & Admin. Expense(SGA) was $326 Mil.
Total Current Liabilities was $899 Mil.
Long-Term Debt was $2,036 Mil.
Net Income was 83.3 + 84.8 + 82.6 + 83.4 = $334 Mil.
Non Operating Income was -44.8 + 0 + 0 + 143.9 = $99 Mil.
Cash Flow from Operations was 79.1 + 82 + 12.1 + 120.4 = $294 Mil.
Accounts Receivable was $381 Mil.
Revenue was 679.8 + 700.6 + 690 + 637.9 = $2,708 Mil.
Gross Profit was 255.4 + 280.5 + 288.4 + 248.8 = $1,073 Mil.
Total Current Assets was $1,719 Mil.
Total Assets was $3,216 Mil.
Property, Plant and Equipment(Net PPE) was $400 Mil.
Depreciation, Depletion and Amortization(DDA) was $100 Mil.
Selling, General & Admin. Expense(SGA) was $359 Mil.
Total Current Liabilities was $836 Mil.
Long-Term Debt was $2,033 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)
=(432.3 / 2861.7) / (380.7 / 2708.3)
=0.15106405 / 0.14056788
=1.0747

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)
=(1073.1 / 2708.3) / (1123.4 / 2861.7)
=0.39622642 / 0.39256386
=1.0093

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 - (1870.5 + 392.3) / 3349.2) / (1 - (1719.3 + 399.5) / 3215.5)
=0.32437597 / 0.34106671
=0.9511

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
=2861.7 / 2708.3
=1.0566

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))
=(100.1 / (100.1 + 399.5)) / (84.2 / (84.2 + 392.3))
=0.20036029 / 0.17670514
=1.1339

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)
=(326.1 / 2861.7) / (359.4 / 2708.3)
=0.11395324 / 0.13270317
=0.8587

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)
=((2035.8 + 899.1) / 3349.2) / ((2033 + 835.7) / 3215.5)
=0.87629882 / 0.89214741
=0.9822

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
=(334.1 - 99.1 - 293.6) / 3349.2
=-0.0175

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.

B/E Aerospace Inc has a M-score of -2.41 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 local exchange's currency.

B/E Aerospace Inc Annual Data

Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15Dec16
DSRI 0.84790.98990.89271.25260.92671.57431.04710.50491.17110.9278
GMI 1.03420.9910.99290.95110.96950.89561.01561.05320.98181.0306
AQI 0.80891.0761.00641.0840.89381.05990.9290.96880.96791.2823
SGI 1.48711.25770.91831.0241.25990.76581.1511.17961.05031.0745
DEPI 0.92630.88890.86061.27861.02921.15721.14140.65971.47230.179
SGAI 0.82250.97071.23611.05310.95161.17960.88970.91170.98640.8679
LVGI 0.50242.14490.85881.04250.95681.12040.93521.85360.98450.2797
TATA 0.1005-0.03940.0221-0.041-0.0232-0.0077-0.00240.0306-0.00770.0553
M-score -1.59-2.80-2.56-2.40-2.46-2.28-2.28-2.92-2.27-1.93

B/E Aerospace Inc Quarterly Data

Sep14Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16Dec16
DSRI 1.87450.50480.47570.37980.32891.17121.13571.06031.07470.9278
GMI 0.96311.05321.07441.12441.09390.98171.00760.99431.00931.0306
AQI 1.14840.96880.86590.75440.79640.96791.01210.99880.95111.2823
SGI 0.71581.17961.31841.47511.70991.05021.04231.04721.05661.0745
DEPI 1.12070.65970.62890.62850.79841.47231.3931.25211.13390.179
SGAI 0.98910.91170.91920.87880.86780.98640.96750.98650.85870.8679
LVGI 1.06581.85361.85151.6371.6440.98450.97791.00170.98220.2797
TATA 0.0195-0.0087-0.0125-0.0393-0.0474-0.0385-0.0282-0.029-0.01750.0282
M-score -1.80-3.10-3.06-3.07-2.93-2.42-2.38-2.49-2.41-2.05
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