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Electro Rent Corp (NAS:ELRC)
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.

Electro Rent Corp has a M-score of -2.56 suggests that the company is not a manipulator.

ELRC' s 10-Year Beneish M-Score Range
Min: -4.43   Max: 3.82
Current: -2.56

-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 -3.08.


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 * 1.1532+0.528 * 1.0479+0.404 * 1.4249+0.892 * 1.0065+0.115 * 0.9398
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0286+4.679 * -0.0947-0.327 * 0.8915
=-2.56

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

This Year (Nov14) TTM:Last Year (Nov13) TTM:
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.
Net Income was 4.795 + 4.771 + 4.593 + 4.537 = $18.7 Mil.
Non Operating Income was 1.39 + 0 + 0 + 0 = $1.4 Mil.
Cash Flow from Operations was 10.564 + 12.432 + 10.852 + 11.993 = $45.8 Mil.
Accounts Receivable was $33.1 Mil.
Revenue was 57.876 + 60.168 + 60.366 + 64.672 = $243.1 Mil.
Gross Profit was 37.379 + 37.838 + 39.019 + 36.48 = $150.7 Mil.
Total Current Assets was $41.3 Mil.
Total Assets was $312.1 Mil.
Property, Plant and Equipment(Net PPE) was $251.2 Mil.
Depreciation, Depletion and Amortization(DDA) was $58.6 Mil.
Selling, General & Admin. Expense(SGA) was $57.6 Mil.
Total Current Liabilities was $81.1 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)
=(38.422 / 244.667) / (33.103 / 243.082)
=0.15703793 / 0.13618038
=1.1532

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)
=(36.395 / 243.082) / (35.495 / 244.667)
=0.62002123 / 0.59168584
=1.0479

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 - (43.622 + 230.743) / 301.335) / (1 - (41.294 + 251.185) / 312.082)
=0.08950172 / 0.06281362
=1.4249

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
=244.667 / 243.082
=1.0065

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))
=(58.578 / (58.578 + 251.185)) / (58.123 / (58.123 + 230.743))
=0.18910586 / 0.20121094
=0.9398

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)
=(59.634 / 244.667) / (57.603 / 243.082)
=0.24373536 / 0.23696942
=1.0286

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 + 69.851) / 301.335) / ((0 + 81.146) / 312.082)
=0.23180513 / 0.260015
=0.8915

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
=(18.696 - 1.39 - 45.841) / 301.335
=-0.0947

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 -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 own currency.

Electro Rent Corp Annual Data

May05May06May07May08May09May10May11May12May13May14
DSRI 1.13951.24421.12351.16790.77931.41120.76061.07950.95571.0501
GMI 0.96041.00240.98981.07641.00081.12941.26811.00370.95360.9823
AQI 0.80832.28661.08170.91811.24331.50961.28461.06110.95581.0824
SGI 1.14351.06681.0911.1540.90281.11791.56811.08671.00070.9695
DEPI 1.1041.03270.97390.9880.92591.1370.99831.07730.930.9531
SGAI 0.8111.05931.09680.94271.12070.93460.6511.03361.06111.0749
LVGI 0.89550.88950.9960.86921.2441.06421.2831.1561.1440.8306
TATA -0.1121-0.1088-0.1204-0.1128-0.174-0.0818-0.1477-0.1441-0.1448-0.0953
M-score -2.77-2.15-2.84-2.66-3.59-2.10-2.66-3.03-3.31-2.85

Electro Rent Corp Quarterly Data

Aug12Nov12Feb13May13Aug13Nov13Feb14May14Aug14Nov14
DSRI 1.00151.02971.17370.95570.99720.93450.90641.05011.0161.1532
GMI 0.98270.95170.95280.97210.96150.9430.93120.98231.00391.0479
AQI 1.11931.09321.01050.95580.83510.95521.2681.08241.40381.4249
SGI 1.05011.02871.04481.00071.0080.96480.93720.96950.96981.0065
DEPI 0.97590.94010.93380.930.95780.95290.93120.95310.95330.9398
SGAI 1.03211.08391.10951.00861.05711.0891.11771.07491.06371.0286
LVGI 1.11931.42841.29171.1441.15070.79620.7840.83060.82340.8915
TATA -0.1596-0.1401-0.1253-0.1448-0.1232-0.1269-0.1228-0.0953-0.0936-0.0947
M-score -3.19-3.23-3.01-3.29-3.20-3.17-3.08-2.85-2.72-2.56
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