Switch to:
GuruFocus has detected 5 Warning Signs with Emerson Electric Co $EMR.
More than 500,000 people have already joined GuruFocus to track the stocks they follow and exchange investment ideas.
Emerson Electric Co (NYSE:EMR)
Beneish M-Score
-3.10 (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.

Emerson Electric Co has a M-score of -3.10 suggests that the company is not a manipulator.

EMR' s Beneish M-Score Range Over the Past 10 Years
Min: -3.1   Max: -2.31
Current: -3.1

-3.1
-2.31

During the past 13 years, the highest Beneish M-Score of Emerson Electric Co was -2.31. The lowest was -3.10. And the median was -2.59.


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 Emerson Electric Co 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 * 0.6787+0.528 * 0.9959+0.404 * 0.8482+0.892 * 0.9304+0.115 * 0.7651
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0249+4.679 * -0.0498-0.327 * 0.802
=-3.10

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

This Year (Dec16) TTM:Last Year (Dec15) TTM:
Accounts Receivable was $2,426 Mil.
Revenue was 3216 + -245 + 5126 + 4928 = $13,025 Mil.
Gross Profit was 1365 + 285 + 2094 + 1994 = $5,738 Mil.
Total Current Assets was $8,877 Mil.
Total Assets was $17,471 Mil.
Property, Plant and Equipment(Net PPE) was $2,861 Mil.
Depreciation, Depletion and Amortization(DDA) was $567 Mil.
Selling, General & Admin. Expense(SGA) was $3,060 Mil.
Total Current Liabilities was $4,146 Mil.
Long-Term Debt was $3,815 Mil.
Net Income was 309 + 438 + 479 + 369 = $1,595 Mil.
Non Operating Income was -33 + 44 + -102 + -76 = $-167 Mil.
Cash Flow from Operations was 238 + 957 + 718 + 719 = $2,632 Mil.
Accounts Receivable was $3,842 Mil.
Revenue was 3337 + -241 + 5503 + 5400 = $13,999 Mil.
Gross Profit was 1414 + 328 + 2234 + 2166 = $6,142 Mil.
Total Current Assets was $9,694 Mil.
Total Assets was $21,552 Mil.
Property, Plant and Equipment(Net PPE) was $3,520 Mil.
Depreciation, Depletion and Amortization(DDA) was $510 Mil.
Selling, General & Admin. Expense(SGA) was $3,209 Mil.
Total Current Liabilities was $8,202 Mil.
Long-Term Debt was $4,043 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)
=(2426 / 13025) / (3842 / 13999)
=0.1862572 / 0.27444817
=0.6787

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)
=(6142 / 13999) / (5738 / 13025)
=0.43874562 / 0.44053743
=0.9959

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 - (8877 + 2861) / 17471) / (1 - (9694 + 3520) / 21552)
=0.32814378 / 0.38687825
=0.8482

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
=13025 / 13999
=0.9304

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))
=(510 / (510 + 3520)) / (567 / (567 + 2861))
=0.12655087 / 0.16540257
=0.7651

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)
=(3060 / 13025) / (3209 / 13999)
=0.23493282 / 0.22923066
=1.0249

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)
=((3815 + 4146) / 17471) / ((4043 + 8202) / 21552)
=0.45566939 / 0.56816073
=0.802

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
=(1595 - -167 - 2632) / 17471
=-0.0498

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.

Emerson Electric Co has a M-score of -3.10 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 local exchange's currency.

Emerson Electric Co Annual Data

Sep07Sep08Sep09Sep10Sep11Sep12Sep13Sep14Sep15Sep16
DSRI 1.02220.96710.96821.0520.98031.09820.95481.45220.62411.053
GMI 0.99130.98920.97960.95031.0030.98610.99180.92171.01491.0002
AQI 0.9560.93741.11761.12470.94760.92080.9380.98061.04880.9871
SGI 1.12151.12090.81031.04661.15131.00781.01050.71880.91630.8937
DEPI 0.98820.95670.97550.86480.98731.06031.07191.36150.79561.0079
SGAI 0.99951.00541.05841.04220.96071.01231.02821.02560.97891.0377
LVGI 0.99521.03520.96581.00830.98981.0141.03091.05121.10151.0143
TATA -0.039-0.0419-0.0449-0.0332-0.0158-0.0039-0.0306-0.0552-0.0239-0.0438
M-score -2.56-2.65-2.85-2.55-2.45-2.44-2.69-2.60-3.04-2.75

Emerson Electric Co Quarterly Data

Sep14Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16Dec16
DSRI 1.45221.38771.33811.33210.62411.10391.15261.17851.16330.6787
GMI 0.92170.91620.92950.94371.01491.00440.99230.9810.97970.9959
AQI 0.98060.93190.91830.93311.04880.95510.97070.96230.98710.8482
SGI 0.71880.71650.70410.6720.91630.79030.78180.79730.8090.9304
DEPI 1.36151.36431.34551.35540.79561.06730.99470.9941.00790.7651
SGAI 1.02561.01031.0151.01950.97890.98440.98210.97611.03151.0249
LVGI 1.05121.13061.0941.1151.10151.10791.0731.04451.01430.802
TATA -0.0519-0.0448-0.0587-0.0371-0.0288-0.0317-0.0332-0.0474-0.0487-0.0498
M-score -2.59-2.66-2.77-2.70-3.06-2.76-2.73-2.75-2.75-3.10
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)
FEEDBACK