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Electro Rent Corporation (NAS:ELRC)
Beneish M-Score
-3.17 (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 Corporation has a M-score of -3.08 suggests that the company is not a manipulator.

ELRC' s 10-Year Beneish M-Score Range
Min: -4.43   Max: 3.82
Current: -3.17

-4.43
3.82

During the past 13 years, the highest Beneish M-Score of Electro Rent Corporation was 3.82. The lowest was -4.43. 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 Corporation 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 * 0.9064+0.528 * 0.9312+0.404 * 1.268+0.892 * 0.9372+0.115 * 0.9312
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.1177+4.679 * -0.1228-0.327 * 0.784
=-3.08

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

This Year (Feb14) TTM:Last Year (Feb13) TTM:
Accounts Receivable was $33.8 Mil.
Revenue was 62.016 + 57.876 + 60.168 + 60.366 = $240.4 Mil.
Gross Profit was 35.94 + 37.379 + 37.838 + 39.019 = $150.2 Mil.
Total Current Assets was $39.0 Mil.
Total Assets was $301.9 Mil.
Property, Plant and Equipment(Net PPE) was $237.0 Mil.
Depreciation, Depletion and Amortization(DDA) was $58.6 Mil.
Selling, General & Admin. Expense(SGA) was $58.2 Mil.
Total Current Liabilities was $71.0 Mil.
Long-Term Debt was $0.0 Mil.
Net Income was 4.537 + 5.581 + 5.697 + 6.392 = $22.2 Mil.
Non Operating Income was 0 + 0 + 0 + 0 = $0.0 Mil.
Cash Flow from Operations was 11.993 + 12.357 + 13.984 + 20.946 = $59.3 Mil.
Accounts Receivable was $39.8 Mil.
Revenue was 64.672 + 65.192 + 58.501 + 68.182 = $256.5 Mil.
Gross Profit was 36.48 + 38.47 + 36.08 + 38.198 = $149.2 Mil.
Total Current Assets was $46.5 Mil.
Total Assets was $323.8 Mil.
Property, Plant and Equipment(Net PPE) was $255.4 Mil.
Depreciation, Depletion and Amortization(DDA) was $57.8 Mil.
Selling, General & Admin. Expense(SGA) was $55.6 Mil.
Total Current Liabilities was $97.1 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)
=(33.827 / 240.426) / (39.821 / 256.547)
=0.1406961 / 0.15521912
=0.9064

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)
=(37.379 / 256.547) / (35.94 / 240.426)
=0.58167899 / 0.62462462
=0.9312

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 - (39.041 + 237.012) / 301.876) / (1 - (46.526 + 255.408) / 323.777)
=0.08554175 / 0.0674631
=1.268

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
=240.426 / 256.547
=0.9372

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))
=(57.831 / (57.831 + 255.408)) / (58.609 / (58.609 + 237.012))
=0.1846226 / 0.19825723
=0.9312

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)
=(58.213 / 240.426) / (55.577 / 256.547)
=0.2421244 / 0.21663477
=1.1177

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 + 70.969) / 301.876) / ((0 + 97.093) / 323.777)
=0.23509322 / 0.29987615
=0.784

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
=(22.207 - 0 - 59.28) / 301.876
=-0.1228

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 Corporation has a M-score of -3.08 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 Corporation 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 Corporation Quarterly Data

Nov11Feb12May12Aug12Nov12Feb13May13Aug13Nov13Feb14
DSRI 0.90070.82991.07951.00151.02971.17370.95570.99720.93450.9064
GMI 1.23431.16030.98460.98270.95170.95280.97210.96150.9430.9312
AQI 0.890.33671.06111.11931.09321.01050.95580.83510.95521.268
SGI 1.35171.18281.08671.05011.02871.04481.00071.0080.96480.9372
DEPI 1.08751.22651.07730.97590.94010.93380.930.95780.95290.9312
SGAI 0.68550.72641.08741.03211.08391.10951.00861.05711.0891.1177
LVGI 1.37421.0931.1561.11931.42841.29171.1441.15070.79620.784
TATA -0.1644-0.1825-0.1441-0.1596-0.1401-0.1253-0.1448-0.1232-0.1269-0.1228
M-score -3.01-3.47-3.04-3.19-3.23-3.01-3.29-3.20-3.17-3.08
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