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Eaton Corp PLC (NYSE:ETN)
Beneish M-Score
-2.69 (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.

Eaton Corp PLC has a M-score of -2.69 suggests that the company is not a manipulator.

ETN' s Beneish M-Score Range Over the Past 10 Years
Min: -3.05   Max: -2.04
Current: -2.69

-3.05
-2.04

During the past 13 years, the highest Beneish M-Score of Eaton Corp PLC was -2.04. The lowest was -3.05. And the median was -2.52.


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 Eaton Corp PLC 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 * 1.0261+0.528 * 0.9836+0.404 * 1.0222+0.892 * 0.9207+0.115 * 0.982
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0533+4.679 * -0.0315-0.327 * 1.0127
=-2.69

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

This Year (Jun16) TTM:Last Year (Jun15) TTM:
Accounts Receivable was $3,628 Mil.
Revenue was 5080 + 4813 + 5057 + 5203 = $20,153 Mil.
Gross Profit was 1661 + 1522 + 1630 + 1606 = $6,419 Mil.
Total Current Assets was $6,826 Mil.
Total Assets was $31,154 Mil.
Property, Plant and Equipment(Net PPE) was $3,551 Mil.
Depreciation, Depletion and Amortization(DDA) was $932 Mil.
Selling, General & Admin. Expense(SGA) was $3,569 Mil.
Total Current Liabilities was $4,816 Mil.
Long-Term Debt was $7,605 Mil.
Net Income was 491 + 404 + 532 + 446 = $1,873 Mil.
Non Operating Income was -5 + 18 + 8 + 3 = $24 Mil.
Cash Flow from Operations was 745 + 371 + 742 + 973 = $2,831 Mil.
Accounts Receivable was $3,840 Mil.
Revenue was 5372 + 5223 + 5565 + 5728 = $21,888 Mil.
Gross Profit was 1697 + 1630 + 1718 + 1812 = $6,857 Mil.
Total Current Assets was $7,644 Mil.
Total Assets was $32,579 Mil.
Property, Plant and Equipment(Net PPE) was $3,680 Mil.
Depreciation, Depletion and Amortization(DDA) was $944 Mil.
Selling, General & Admin. Expense(SGA) was $3,680 Mil.
Total Current Liabilities was $5,056 Mil.
Long-Term Debt was $7,770 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)
=(3628 / 20153) / (3840 / 21888)
=0.18002283 / 0.1754386
=1.0261

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)
=(6857 / 21888) / (6419 / 20153)
=0.31327668 / 0.31851337
=0.9836

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 - (6826 + 3551) / 31154) / (1 - (7644 + 3680) / 32579)
=0.66691276 / 0.65241413
=1.0222

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
=20153 / 21888
=0.9207

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))
=(944 / (944 + 3680)) / (932 / (932 + 3551))
=0.20415225 / 0.2078965
=0.982

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)
=(3569 / 20153) / (3680 / 21888)
=0.17709522 / 0.16812865
=1.0533

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)
=((7605 + 4816) / 31154) / ((7770 + 5056) / 32579)
=0.3986968 / 0.39368919
=1.0127

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
=(1873 - 24 - 2831) / 31154
=-0.0315

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.

Eaton Corp PLC has a M-score of -2.69 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.

Eaton Corp PLC Annual Data

Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15
DSRI 0.96021.07480.8811.07161.02070.93281.39860.77690.98271.0259
GMI 1.0430.95811.02921.04550.87470.99761.00070.98440.9890.9731
AQI 0.94971.13581.17461.03310.93930.98361.27480.95891.00091.0392
SGI 1.12491.06551.17980.77221.15511.17021.01631.35161.0230.9248
DEPI 0.98650.95860.9410.93691.04341.03361.29070.66080.99391.0081
SGAI 0.98721.03530.99581.16050.95560.94121.040.99350.95841.0206
LVGI 0.94461.02250.91810.89061.0341.02191.0890.91671.02011.0019
TATA -0.0461-0.0133-0.0255-0.0635-0.02050.0036-0.0105-0.01220.0112-0.0138
M-score -2.60-2.40-2.44-2.88-2.51-2.37-2.04-2.46-2.43-2.59

Eaton Corp PLC Quarterly Data

Mar14Jun14Sep14Dec14Mar15Jun15Sep15Dec15Mar16Jun16
DSRI 0.83850.89980.93130.98270.95750.97970.971.02591.04551.0261
GMI 0.97760.98760.98460.9890.97840.96160.9750.97310.98110.9836
AQI 0.98470.9721.00041.00091.00031.01661.01161.03921.02861.0222
SGI 1.25861.16661.07971.0231.00250.97740.94890.92480.91750.9207
DEPI 0.74290.84760.92410.99390.99651.02681.03191.00811.01230.982
SGAI 0.98120.9810.97820.95840.9650.96190.97781.02061.03491.0533
LVGI 0.95191.00770.9941.02011.0550.98041.01291.00190.96611.0127
TATA -0.0079-0.00430.00980.01120.01030.0079-0.0178-0.0138-0.0252-0.0315
M-score -2.46-2.48-2.44-2.43-2.49-2.48-2.64-2.59-2.62-2.69
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