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Electro Rent Corp (NAS:ELRC)
Beneish M-Score
-3.13 (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 -3.13 suggests that the company is not a manipulator.

ELRC' s 10-Year Beneish M-Score Range
Min: -4.28   Max: -0.8
Current: -3.13

-4.28
-0.8

During the past 13 years, the highest Beneish M-Score of Electro Rent Corp was -0.80. The lowest was -4.28. And the median was -3.13.


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 * 0.9798+0.528 * 1.0554+0.404 * 0.9047+0.892 * 0.9884+0.115 * 1.0209
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0185+4.679 * -0.1285-0.327 * 1.0233
=-3.13

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

This Year (May15) TTM:Last Year (May14) TTM:
Accounts Receivable was $33.9 Mil.
Revenue was 60.413 + 56.342 + 59.703 + 61.871 = $238.3 Mil.
Gross Profit was 34.596 + 32.2 + 35.495 + 36.395 = $138.7 Mil.
Total Current Assets was $37.9 Mil.
Total Assets was $300.3 Mil.
Property, Plant and Equipment(Net PPE) was $244.9 Mil.
Depreciation, Depletion and Amortization(DDA) was $57.6 Mil.
Selling, General & Admin. Expense(SGA) was $59.3 Mil.
Total Current Liabilities was $72.3 Mil.
Long-Term Debt was $0.0 Mil.
Net Income was 3.441 + 2.425 + 4.795 + 4.771 = $15.4 Mil.
Non Operating Income was 0 + 0 + 1.39 + 0 = $1.4 Mil.
Cash Flow from Operations was 13.123 + 16.5 + 10.564 + 12.432 = $52.6 Mil.
Accounts Receivable was $35.0 Mil.
Revenue was 61.077 + 62.016 + 57.876 + 60.168 = $241.1 Mil.
Gross Profit was 36.936 + 35.94 + 37.379 + 37.838 = $148.1 Mil.
Total Current Assets was $40.9 Mil.
Total Assets was $302.1 Mil.
Property, Plant and Equipment(Net PPE) was $241.7 Mil.
Depreciation, Depletion and Amortization(DDA) was $58.3 Mil.
Selling, General & Admin. Expense(SGA) was $58.9 Mil.
Total Current Liabilities was $71.1 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)
=(33.863 / 238.329) / (34.97 / 241.137)
=0.1420851 / 0.14502129
=0.9798

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)
=(32.2 / 241.137) / (34.596 / 238.329)
=0.61414466 / 0.58190988
=1.0554

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 - (37.927 + 244.872) / 300.314) / (1 - (40.916 + 241.669) / 302.058)
=0.05832229 / 0.06446775
=0.9047

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
=238.329 / 241.137
=0.9884

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))
=(58.286 / (58.286 + 241.669)) / (57.562 / (57.562 + 244.872))
=0.19431581 / 0.19032913
=1.0209

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)
=(59.313 / 238.329) / (58.92 / 241.137)
=0.24887026 / 0.24434243
=1.0185

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 + 72.336) / 300.314) / ((0 + 71.1) / 302.058)
=0.24086789 / 0.23538526
=1.0233

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
=(15.432 - 1.39 - 52.619) / 300.314
=-0.1285

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 -3.13 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

Feb13May13Aug13Nov13Feb14May14Aug14Nov14Feb15May15
DSRI 1.17370.95570.99720.93450.90641.05011.0161.15320.9530.9798
GMI 0.95280.97210.96150.9430.93120.98231.00391.04791.05851.0554
AQI 1.01050.95580.83510.95521.2680.80651.40381.42491.21620.9047
SGI 1.04481.00071.0080.96480.93720.96950.96981.00650.9940.9884
DEPI 0.93380.930.95780.95290.93120.97470.95330.93980.99051.0209
SGAI 1.10951.00861.05711.0891.11771.07491.06371.02861.03571.0185
LVGI 1.29171.1441.15070.79620.7840.83060.82340.89151.02361.0233
TATA -0.1253-0.1448-0.1232-0.1269-0.1228-0.0953-0.0936-0.0947-0.1165-0.1285
M-score -3.01-3.29-3.20-3.17-3.08-2.95-2.72-2.56-2.97-3.13
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