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GuruFocus has detected 4 Warning Signs with B/E Aerospace Inc $BEAV.
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B/E Aerospace Inc (NAS:BEAV)
Beneish M-Score
-2.56 (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 -2.56 suggests that the company is not a manipulator.

BEAV' s Beneish M-Score Range Over the Past 10 Years
Min: -3.98   Max: 5.39
Current: -2.56

-3.98
5.39

During the past 13 years, the highest Beneish M-Score of B/E Aerospace Inc was 5.39. The lowest was -3.98. And the median was -2.33.


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 * 0.9278+0.528 * 1.0306+0.404 * 0.9347+0.892 * 1.0745+0.115 * 1.0505
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.8679+4.679 * -0.0259-0.327 * 0.9443
=-2.56

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

This Year (Dec16) TTM:Last Year (Dec15) TTM:
Accounts Receivable was $354 Mil.
Revenue was 730.4 + 732.7 + 753.1 + 716.7 = $2,933 Mil.
Gross Profit was 272.8 + 275.2 + 305.3 + 280.1 = $1,133 Mil.
Total Current Assets was $1,869 Mil.
Total Assets was $3,370 Mil.
Property, Plant and Equipment(Net PPE) was $407 Mil.
Depreciation, Depletion and Amortization(DDA) was $84 Mil.
Selling, General & Admin. Expense(SGA) was $336 Mil.
Total Current Liabilities was $857 Mil.
Long-Term Debt was $2,037 Mil.
Net Income was 60.4 + 83.3 + 84.8 + 82.6 = $311 Mil.
Non Operating Income was 136.4 + -44.8 + 0 + 0 = $92 Mil.
Cash Flow from Operations was 133.6 + 79.1 + 82 + 12.1 = $307 Mil.
Accounts Receivable was $355 Mil.
Revenue was 659.2 + 679.8 + 700.6 + 690 = $2,730 Mil.
Gross Profit was 262.8 + 255.4 + 280.5 + 288.4 = $1,087 Mil.
Total Current Assets was $1,658 Mil.
Total Assets was $3,141 Mil.
Property, Plant and Equipment(Net PPE) was $391 Mil.
Depreciation, Depletion and Amortization(DDA) was $85 Mil.
Selling, General & Admin. Expense(SGA) was $360 Mil.
Total Current Liabilities was $822 Mil.
Long-Term Debt was $2,034 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)
=(353.5 / 2932.9) / (354.6 / 2729.6)
=0.12052917 / 0.12990914
=0.9278

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)
=(1087.1 / 2729.6) / (1133.4 / 2932.9)
=0.39826348 / 0.38644345
=1.0306

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 - (1868.6 + 407) / 3370.1) / (1 - (1658.4 + 391.2) / 3140.9)
=0.32476781 / 0.34744818
=0.9347

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
=2932.9 / 2729.6
=1.0745

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))
=(85.3 / (85.3 + 391.2)) / (83.6 / (83.6 + 407))
=0.17901364 / 0.17040359
=1.0505

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)
=(336.1 / 2932.9) / (360.4 / 2729.6)
=0.11459647 / 0.132034
=0.8679

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)
=((2037 + 857.1) / 3370.1) / ((2034.1 + 822.2) / 3140.9)
=0.8587579 / 0.90938903
=0.9443

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
=(311.1 - 91.6 - 306.8) / 3370.1
=-0.0259

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 -2.56 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 0.84790.98990.89271.25260.92670.97681.06730.80021.16830.9278
GMI 1.03420.9910.99290.95110.96950.99270.98910.97560.98181.0306
AQI 0.80891.0761.00641.0840.89381.05990.9290.96750.96910.9347
SGI 1.48711.25770.91831.0241.25991.23421.12910.7461.05031.0745
DEPI 0.92630.88890.86061.27861.02921.15721.14140.65981.47211.0505
SGAI 0.82250.97071.23611.05310.95161.00180.98050.97410.98640.8679
LVGI 0.50242.14490.85881.04250.95681.12040.93521.84950.98670.9443
TATA 0.0769-0.03940.0844-0.041-0.0232-0.0077-0.00240.0303-0.00770.0013
M-score -1.70-2.80-2.27-2.40-2.46-2.33-2.31-3.09-2.28-2.44

B/E Aerospace Inc Quarterly Data

Sep14Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16Dec16
DSRI 1.10570.80021.00571.15421.5751.16830.97830.74670.58180.9278
GMI 1.0480.97560.93180.88760.77040.98181.04081.08041.20011.0306
AQI 1.14840.96750.86590.75440.79640.96911.01210.99880.95110.9347
SGI 1.21350.7460.62360.48530.35711.05031.21011.4871.95161.0745
DEPI 1.12070.65980.62890.62850.79841.47211.3931.25211.13391.0505
SGAI 0.9860.97411.02210.97761.06210.98640.94590.97330.80290.8679
LVGI 1.06581.84951.85151.6371.6440.98670.97791.00170.98220.9443
TATA 0.00970.03030.0264-0.00190.0126-0.0385-0.0282-0.029-0.0175-0.0259
M-score -2.07-3.09-3.10-3.21-2.91-2.42-2.36-2.34-1.96-2.56
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