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Electro Rent Corp (NAS:ELRC)
Beneish M-Score
-2.85 (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 -2.85 suggests that the company is not a manipulator.

ELRC' s 10-Year Beneish M-Score Range
Min: -4.43   Max: 3.82
Current: -2.85

-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 * 1.0501+0.528 * 0.9823+0.404 * 1.0824+0.892 * 0.9695+0.115 * 0.9531
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0749+4.679 * -0.0953-0.327 * 0.8306
=-2.85

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

This Year (May14) TTM:Last Year (May13) TTM:
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 $235.0 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.
Net Income was 4.593 + 4.537 + 5.581 + 5.697 = $20.4 Mil.
Non Operating Income was 0 + 0 + 0 + 0 = $0.0 Mil.
Cash Flow from Operations was 10.852 + 11.993 + 12.357 + 13.984 = $49.2 Mil.
Accounts Receivable was $34.4 Mil.
Revenue was 60.366 + 64.672 + 65.192 + 58.501 = $248.7 Mil.
Gross Profit was 39.019 + 36.48 + 38.47 + 36.08 = $150.0 Mil.
Total Current Assets was $44.8 Mil.
Total Assets was $318.9 Mil.
Property, Plant and Equipment(Net PPE) was $248.7 Mil.
Depreciation, Depletion and Amortization(DDA) was $58.1 Mil.
Selling, General & Admin. Expense(SGA) was $56.5 Mil.
Total Current Liabilities was $90.4 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)
=(34.97 / 241.137) / (34.35 / 248.731)
=0.14502129 / 0.138101
=1.0501

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)
=(35.94 / 248.731) / (36.936 / 241.137)
=0.60325814 / 0.61414466
=0.9823

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 - (40.916 + 235.01) / 302.058) / (1 - (44.752 + 248.682) / 318.926)
=0.08651319 / 0.07993077
=1.0824

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
=241.137 / 248.731
=0.9695

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))
=(58.109 / (58.109 + 248.682)) / (58.286 / (58.286 + 235.01))
=0.18940908 / 0.19872757
=0.9531

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)
=(58.92 / 241.137) / (56.543 / 248.731)
=0.24434243 / 0.22732591
=1.0749

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 + 71.1) / 302.058) / ((0 + 90.377) / 318.926)
=0.23538526 / 0.28337922
=0.8306

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
=(20.408 - 0 - 49.186) / 302.058
=-0.0953

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 -2.85 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

May04May05May06May07May08May09May10May11May12May13
DSRI 1.36141.13951.24421.12351.16790.77931.41120.76061.07950.9557
GMI 0.98380.96041.00240.98981.07641.00081.12941.26811.00370.9536
AQI 0.9820.80832.28661.08170.91811.24331.50961.28461.06110.9558
SGI 0.8651.14351.06681.0911.1540.90281.11791.56811.08671.0007
DEPI 1.411.1041.03270.97390.9880.92591.1370.99831.07730.93
SGAI 0.99560.8111.05931.09680.94271.12070.93460.6511.03361.0611
LVGI 2.06130.89550.88950.9960.86921.2441.06421.2831.1561.144
TATA -0.152-0.1121-0.1088-0.1204-0.1128-0.174-0.0818-0.1477-0.1441-0.1448
M-score -3.29-2.77-2.15-2.84-2.66-3.59-2.10-2.66-3.03-3.31

Electro Rent Corp Quarterly Data

Feb12May12Aug12Nov12Feb13May13Aug13Nov13Feb14May14
DSRI 0.82991.07951.00151.02971.17370.95570.99720.93450.90641.0501
GMI 1.16030.98460.98270.95170.95280.97210.96150.9430.93120.9823
AQI 0.33671.06111.11931.09321.01050.95580.83510.95521.2681.0824
SGI 1.18281.08671.05011.02871.04481.00071.0080.96480.93720.9695
DEPI 1.22651.07730.97590.94010.93380.930.95780.95290.93120.9531
SGAI 0.72641.08741.03211.08391.10951.00861.05711.0891.11771.0749
LVGI 1.0931.1561.11931.42841.29171.1441.15070.79620.7840.8306
TATA -0.1825-0.1441-0.1596-0.1401-0.1253-0.1448-0.1232-0.1269-0.1228-0.0953
M-score -3.47-3.04-3.19-3.23-3.01-3.29-3.20-3.17-3.08-2.85
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