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GuruFocus has detected 5 Warning Signs with Crane Co $CR.
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Crane Co (NYSE:CR)
Beneish M-Score
-2.77 (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.

Crane Co has a M-score of -2.77 suggests that the company is not a manipulator.

CR' s Beneish M-Score Range Over the Past 10 Years
Min: -3.27   Max: 30513.62
Current: -2.77

-3.27
30513.62

During the past 13 years, the highest Beneish M-Score of Crane Co was 30513.62. The lowest was -3.27. 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 Crane Co 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 * 0.9943+0.528 * 0.9671+0.404 * 0.9608+0.892 * 1.0027+0.115 * 1.0036
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.051+4.679 * -0.0565-0.327 * 0.9355
=-2.77

* 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 $396 Mil.
Revenue was 681.5 + 694.2 + 712.2 + 660 = $2,748 Mil.
Gross Profit was 247.7 + 245 + 263.1 + 233.9 = $990 Mil.
Total Current Assets was $1,316 Mil.
Total Assets was $3,428 Mil.
Property, Plant and Equipment(Net PPE) was $279 Mil.
Depreciation, Depletion and Amortization(DDA) was $67 Mil.
Selling, General & Admin. Expense(SGA) was $597 Mil.
Total Current Liabilities was $521 Mil.
Long-Term Debt was $745 Mil.
Net Income was -64 + 63.5 + 68.2 + 55 = $123 Mil.
Non Operating Income was -1 + -0.1 + -0.3 + -0.3 = $-2 Mil.
Cash Flow from Operations was 149.7 + 116.6 + 69.8 + -18 = $318 Mil.
Accounts Receivable was $398 Mil.
Revenue was 680.5 + 669.9 + 711.2 + 678.8 = $2,740 Mil.
Gross Profit was 239 + 238.2 + 240.5 + 236.8 = $955 Mil.
Total Current Assets was $1,204 Mil.
Total Assets was $3,337 Mil.
Property, Plant and Equipment(Net PPE) was $276 Mil.
Depreciation, Depletion and Amortization(DDA) was $67 Mil.
Selling, General & Admin. Expense(SGA) was $567 Mil.
Total Current Liabilities was $573 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)
=(396.4 / 2747.9) / (397.6 / 2740.4)
=0.14425561 / 0.14508831
=0.9943

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)
=(954.5 / 2740.4) / (989.7 / 2747.9)
=0.34830682 / 0.36016594
=0.9671

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 - (1315.7 + 278.9) / 3428) / (1 - (1203.5 + 276) / 3336.9)
=0.53483081 / 0.55662441
=0.9608

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
=2747.9 / 2740.4
=1.0027

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))
=(67 / (67 + 276)) / (67.4 / (67.4 + 278.9))
=0.19533528 / 0.19462893
=1.0036

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)
=(597 / 2747.9) / (566.5 / 2740.4)
=0.21725681 / 0.20672165
=1.051

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)
=((745.3 + 520.8) / 3428) / ((744.6 + 572.8) / 3336.9)
=0.36934072 / 0.39479757
=0.9355

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
=(122.7 - -1.7 - 318.1) / 3428
=-0.0565

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.

Crane Co has a M-score of -2.77 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.

Crane Co Annual Data

Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15Dec16
DSRI 0.90090.97391.0021.07721.00820.92530.83331.03280.9943
GMI 1.87390.52770.98530.97671.00491.00540.97980.99770.967
AQI 1.03620.97850.9661.04291.01140.92850.96290.97740.9608
SGI 1.16050.99430.84340.99221.14731.03151.1270.93691.0027
DEPI 0.90381.06330.96930.96460.96891.0310.73551.061.0036
SGAI 1.03331.06730.99630.97890.935201.00260.99911.051
LVGI 1.80661.00430.49811.03930.98870.96181.01050.98070.9355
TATA -0.106-0.0209-0.02070.0071-0.0444-0.0058-0.02140.0001-0.0565
M-score -2.73-2.87-2.57-2.39-2.53-2.39-2.68-2.50-2.77

Crane Co Quarterly Data

Sep14Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16Dec16
DSRI 1.02370.83330.88720.90391.00161.03281.04621.05381.00790.9943
GMI 0.98760.97970.99011.00321.00010.99760.98980.95920.96790.9671
AQI 1.18620.96290.97030.98510.96690.97740.9650.9580.96310.9608
SGI 1.13061.1271.07541.02230.97040.93690.94270.95590.98431.0027
DEPI 0.830.73550.86660.93081.0381.061.03821.02691.00591.0036
SGAI -35.79291.00260.98480.96220.81010.99911.00881.05891.14441.051
LVGI 1.42881.01051.03481.02821.04030.98070.93380.95720.92710.9355
TATA -0.0217-0.0214-0.0232-0.0227-0.01460.00010.00320.0034-0.0085-0.0565
M-score 3.79-2.68-2.67-2.67-2.56-2.50-2.47-2.49-2.56-2.77
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