Switch to:
Electro Rent Corp (NAS:ELRC)
Beneish M-Score
-2.72 (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 -2.72 suggests that the company is not a manipulator.

ELRC' s 10-Year Beneish M-Score Range
Min: -4.43   Max: 3.82
Current: -2.72

-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 -3.10.


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 * 1.016+0.528 * 1.0039+0.404 * 1.4038+0.892 * 0.9698+0.115 * 0.9533
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0637+4.679 * -0.0936-0.327 * 0.8234
=-2.72

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

This Year (Aug14) TTM:Last Year (Aug13) TTM:
Accounts Receivable was $33.9 Mil.
Revenue was 61.871 + 61.077 + 62.016 + 57.876 = $242.8 Mil.
Gross Profit was 36.395 + 36.936 + 35.94 + 37.379 = $146.7 Mil.
Total Current Assets was $37.9 Mil.
Total Assets was $300.7 Mil.
Property, Plant and Equipment(Net PPE) was $235.0 Mil.
Depreciation, Depletion and Amortization(DDA) was $57.8 Mil.
Selling, General & Admin. Expense(SGA) was $59.3 Mil.
Total Current Liabilities was $69.5 Mil.
Long-Term Debt was $0.0 Mil.
Net Income was 4.771 + 4.593 + 4.537 + 5.581 = $19.5 Mil.
Non Operating Income was 0 + 0 + 0 + 0 = $0.0 Mil.
Cash Flow from Operations was 12.432 + 10.852 + 11.993 + 12.357 = $47.6 Mil.
Accounts Receivable was $34.4 Mil.
Revenue was 60.168 + 60.366 + 64.672 + 65.192 = $250.4 Mil.
Gross Profit was 37.838 + 39.019 + 36.48 + 38.47 = $151.8 Mil.
Total Current Assets was $39.9 Mil.
Total Assets was $312.8 Mil.
Property, Plant and Equipment(Net PPE) was $252.3 Mil.
Depreciation, Depletion and Amortization(DDA) was $58.4 Mil.
Selling, General & Admin. Expense(SGA) was $57.4 Mil.
Total Current Liabilities was $87.8 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)
=(33.887 / 242.84) / (34.39 / 250.398)
=0.13954456 / 0.13734135
=1.016

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)
=(36.936 / 250.398) / (36.395 / 242.84)
=0.60626283 / 0.60389557
=1.0039

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 - (37.861 + 235.042) / 300.686) / (1 - (39.879 + 252.324) / 312.791)
=0.09239871 / 0.06582031
=1.4038

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
=242.84 / 250.398
=0.9698

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))
=(58.442 / (58.442 + 252.324)) / (57.763 / (57.763 + 235.042))
=0.1880579 / 0.19727464
=0.9533

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)
=(59.262 / 242.84) / (57.445 / 250.398)
=0.24403723 / 0.22941477
=1.0637

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 + 69.488) / 300.686) / ((0 + 87.788) / 312.791)
=0.23109822 / 0.28066025
=0.8234

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
=(19.482 - 0 - 47.634) / 300.686
=-0.0936

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 -2.72 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

May12Aug12Nov12Feb13May13Aug13Nov13Feb14May14Aug14
DSRI 1.07951.00151.02971.17370.95570.99720.93450.90641.05011.016
GMI 0.98460.98270.95170.95280.97210.96150.9430.93120.98231.0039
AQI 1.06111.11931.09321.01050.95580.83510.95521.2681.08241.4038
SGI 1.08671.05011.02871.04481.00071.0080.96480.93720.96950.9698
DEPI 1.07730.97590.94010.93380.930.95780.95290.93120.95310.9533
SGAI 1.08741.03211.08391.10951.00861.05711.0891.11771.07491.0637
LVGI 1.1561.11931.42841.29171.1441.15070.79620.7840.83060.8234
TATA -0.1441-0.1596-0.1401-0.1253-0.1448-0.1232-0.1269-0.1228-0.0953-0.0936
M-score -3.04-3.19-3.23-3.01-3.29-3.20-3.17-3.08-2.85-2.72
Get WordPress Plugins for easy affiliate links on Stock Tickers and Guru Names | Earn affiliate commissions by embedding GuruFocus Charts
GuruFocus Affiliate Program: Earn up to $400 per referral. ( Learn More)
Free 7-day Trial
FEEDBACK