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Electro Rent Corp (NAS:ELRC)
Beneish M-Score
-3.60 (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.

Electro Rent Corp has a M-score of -3.60 suggests that the company is not a manipulator.

ELRC' s Beneish M-Score Range Over the Past 10 Years
Min: -4.43   Max: 3.82
Current: -3.6

-4.43
3.82

During the past 13 years, the highest Beneish M-Score of Electro Rent Corp was 3.82. The lowest was -4.43. And the median was -3.12.


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 Electro Rent 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 * 0.7597+0.528 * 0.9524+0.404 * 0.7096+0.892 * 0.8722+0.115 * 1.0159
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.1323+4.679 * -0.1423-0.327 * 0.8791
=-3.60

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

This Year (Nov15) TTM:Last Year (Nov14) TTM:
Accounts Receivable was $25.5 Mil.
Revenue was 43.31 + 53.343 + 60.413 + 56.342 = $213.4 Mil.
Gross Profit was 32.221 + 33.565 + 34.596 + 32.2 = $132.6 Mil.
Total Current Assets was $32.1 Mil.
Total Assets was $285.2 Mil.
Property, Plant and Equipment(Net PPE) was $235.0 Mil.
Depreciation, Depletion and Amortization(DDA) was $58.0 Mil.
Selling, General & Admin. Expense(SGA) was $58.9 Mil.
Total Current Liabilities was $58.1 Mil.
Long-Term Debt was $0.0 Mil.
Net Income was 2.19 + 2.47 + 3.441 + 2.425 = $10.5 Mil.
Non Operating Income was 0.013 + 0 + 0 + 0 = $0.0 Mil.
Cash Flow from Operations was 4.828 + 16.654 + 13.123 + 16.5 = $51.1 Mil.
Accounts Receivable was $38.4 Mil.
Revenue was 59.703 + 61.871 + 61.077 + 62.016 = $244.7 Mil.
Gross Profit was 35.495 + 36.395 + 36.936 + 35.94 = $144.8 Mil.
Total Current Assets was $43.6 Mil.
Total Assets was $301.3 Mil.
Property, Plant and Equipment(Net PPE) was $230.7 Mil.
Depreciation, Depletion and Amortization(DDA) was $58.1 Mil.
Selling, General & Admin. Expense(SGA) was $59.6 Mil.
Total Current Liabilities was $69.9 Mil.
Long-Term Debt was $0.0 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)
=(25.461 / 213.408) / (38.422 / 244.667)
=0.11930668 / 0.15703793
=0.7597

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)
=(33.565 / 244.667) / (32.221 / 213.408)
=0.59168584 / 0.62126068
=0.9524

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 - (32.055 + 235.017) / 285.185) / (1 - (43.622 + 230.743) / 301.335)
=0.06351316 / 0.08950172
=0.7096

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
=213.408 / 244.667
=0.8722

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))
=(58.123 / (58.123 + 230.743)) / (58.044 / (58.044 + 235.017))
=0.20121094 / 0.19806115
=1.0159

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)
=(58.896 / 213.408) / (59.634 / 244.667)
=0.27597841 / 0.24373536
=1.1323

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)
=((0 + 58.115) / 285.185) / ((0 + 69.851) / 301.335)
=0.20378 / 0.23180513
=0.8791

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
=(10.526 - 0.013 - 51.105) / 285.185
=-0.1423

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.

Electro Rent Corp has a M-score of -3.60 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.

Electro Rent Corp Annual Data

May06May07May08May09May10May11May12May13May14May15
DSRI 1.24421.12351.16790.77931.41120.76061.07950.95571.05010.9798
GMI 1.00240.98981.07641.00081.12941.26811.00370.95360.98231.0554
AQI 2.28661.08170.91811.24331.50961.28461.06110.95580.80650.9047
SGI 1.06681.0911.1540.90281.11791.56811.08671.00070.96950.9884
DEPI 1.03270.97390.9880.92591.1370.99831.07730.930.97471.0209
SGAI 1.05931.09680.94271.12070.93460.6511.03361.06111.07491.0185
LVGI 0.88950.9960.86921.2441.06421.2831.1561.1440.83061.0233
TATA -0.1088-0.1204-0.1128-0.174-0.0818-0.1477-0.1441-0.1448-0.0953-0.1285
M-score -2.15-2.84-2.66-3.59-2.10-2.66-3.03-3.31-2.95-3.13

Electro Rent Corp Quarterly Data

Aug13Nov13Feb14May14Aug14Nov14Feb15May15Aug15Nov15
DSRI 0.99720.93450.90641.05011.0161.15320.9530.97980.83940.7597
GMI 0.96150.9430.93120.98231.00391.04791.05851.05541.02150.9524
AQI 0.83510.95521.2680.80651.40381.42491.21620.90470.64370.7096
SGI 1.0080.96480.93720.96950.96981.00650.9940.98840.94630.8722
DEPI 0.95780.95290.93120.97470.95330.93980.99051.02091.00811.0159
SGAI 1.05711.0891.11771.07491.06371.02861.03571.01851.05321.1323
LVGI 1.15070.79620.7840.83060.82340.89151.02361.02330.96360.8791
TATA -0.1232-0.1269-0.1228-0.0953-0.0936-0.0947-0.1165-0.1285-0.1541-0.1423
M-score -3.20-3.17-3.08-2.95-2.72-2.56-2.97-3.13-3.53-3.60
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