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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: -4.56   Max: 3.82
Current: -3.6

-4.56
3.82

During the past 13 years, the highest Beneish M-Score of Electro Rent Corp was 3.82. The lowest was -4.56. 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 * 0.8526+0.528 * 0.8971+0.404 * 0.7064+0.892 * 0.8225+0.115 * 0.9786
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.1698+4.679 * -0.1401-0.327 * 0.8982
=-3.60

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

This Year (Feb16) TTM:Last Year (Feb15) TTM:
Accounts Receivable was $22.5 Mil.
Revenue was 39.498 + 43.31 + 53.343 + 60.413 = $196.6 Mil.
Gross Profit was 28.916 + 32.221 + 33.565 + 34.596 = $129.3 Mil.
Total Current Assets was $40.7 Mil.
Total Assets was $287.2 Mil.
Property, Plant and Equipment(Net PPE) was $225.4 Mil.
Depreciation, Depletion and Amortization(DDA) was $57.9 Mil.
Selling, General & Admin. Expense(SGA) was $57.7 Mil.
Total Current Liabilities was $62.1 Mil.
Long-Term Debt was $0.0 Mil.
Net Income was 1.009 + 2.19 + 2.47 + 3.441 = $9.1 Mil.
Non Operating Income was 0.001 + 0.013 + 0 + 0 = $0.0 Mil.
Cash Flow from Operations was 14.715 + 4.828 + 16.654 + 13.123 = $49.3 Mil.
Accounts Receivable was $32.0 Mil.
Revenue was 56.342 + 59.703 + 61.871 + 61.077 = $239.0 Mil.
Gross Profit was 32.2 + 35.495 + 36.395 + 36.936 = $141.0 Mil.
Total Current Assets was $40.2 Mil.
Total Assets was $301.7 Mil.
Property, Plant and Equipment(Net PPE) was $230.2 Mil.
Depreciation, Depletion and Amortization(DDA) was $57.6 Mil.
Selling, General & Admin. Expense(SGA) was $59.9 Mil.
Total Current Liabilities was $72.6 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)
=(22.471 / 196.564) / (32.046 / 238.993)
=0.114319 / 0.13408761
=0.8526

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)
=(141.026 / 238.993) / (129.298 / 196.564)
=0.59008423 / 0.65779085
=0.8971

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 - (40.705 + 225.359) / 287.169) / (1 - (40.179 + 230.158) / 301.727)
=0.07349331 / 0.10403444
=0.7064

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
=196.564 / 238.993
=0.8225

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))
=(57.597 / (57.597 + 230.158)) / (57.945 / (57.945 + 225.359))
=0.20015986 / 0.20453294
=0.9786

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)
=(57.664 / 196.564) / (59.932 / 238.993)
=0.29335992 / 0.25076885
=1.1698

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 + 62.07) / 287.169) / ((0 + 72.606) / 301.727)
=0.2161445 / 0.24063475
=0.8982

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
=(9.11 - 0.014 - 49.32) / 287.169
=-0.1401

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 -0.0984-0.1204-0.1128-0.174-0.0818-0.1477-0.1441-0.1448-0.0953-0.1285
M-score -2.11-2.84-2.66-3.59-2.10-2.66-3.03-3.31-2.95-3.13

Electro Rent Corp Quarterly Data

Nov13Feb14May14Aug14Nov14Feb15May15Aug15Nov15Feb16
DSRI 0.93450.90641.05011.0161.15320.9530.97980.83940.75970.8526
GMI 0.9430.93120.98231.00391.04791.05851.05541.02150.95240.8971
AQI 0.95521.2680.80651.40381.42491.21620.90470.64370.70960.7064
SGI 0.96480.93720.96950.96981.00650.9940.98840.94630.87220.8225
DEPI 0.95290.93120.97470.95330.93980.99051.02091.00811.01590.9786
SGAI 1.0891.11771.07491.06371.02861.03571.01851.05321.13231.1698
LVGI 0.79620.7840.83060.82340.89151.02361.02330.96360.87910.8982
TATA -0.1269-0.1228-0.0953-0.0936-0.0947-0.1165-0.1285-0.1541-0.1423-0.1401
M-score -3.17-3.08-2.95-2.72-2.56-2.97-3.13-3.53-3.60-3.60
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