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ITT Corp (NYSE:ITT)
Beneish M-Score
-1.87 (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.

ITT Corp has a M-score of -1.87 signals that the company is a manipulator.

ITT' s 10-Year Beneish M-Score Range
Min: -4.52   Max: 0.13
Current: -1.87

-4.52
0.13

During the past 13 years, the highest Beneish M-Score of ITT Corp was 0.13. The lowest was -4.52. And the median was -2.49.


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 ITT 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 * 1.0956+0.528 * 0.9762+0.404 * 0.9967+0.892 * 1.1374+0.115 * 1.1357
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.8892+4.679 * 0.0722-0.327 * 0.8812
=-1.87

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

This Year (Jun14) TTM:Last Year (Jun13) TTM:
Accounts Receivable was $622 Mil.
Revenue was 663 + 674.5 + 645.5 + 634 = $2,617 Mil.
Gross Profit was 214.8 + 214.8 + 208.6 + 202.9 = $841 Mil.
Total Current Assets was $1,758 Mil.
Total Assets was $3,813 Mil.
Property, Plant and Equipment(Net PPE) was $443 Mil.
Depreciation, Depletion and Amortization(DDA) was $85 Mil.
Selling, General & Admin. Expense(SGA) was $498 Mil.
Total Current Liabilities was $840 Mil.
Long-Term Debt was $0 Mil.
Net Income was 38.3 + 32.2 + 11.2 + 430.7 = $512 Mil.
Non Operating Income was 0 + -2.2 + -1.8 + 0 = $-4 Mil.
Cash Flow from Operations was 93.4 + -13.6 + 146.4 + 15.1 = $241 Mil.
Accounts Receivable was $499 Mil.
Revenue was 609.2 + 608.2 + 527.5 + 555.9 = $2,301 Mil.
Gross Profit was 197.8 + 190.5 + 164.8 + 168.8 = $722 Mil.
Total Current Assets was $1,571 Mil.
Total Assets was $3,366 Mil.
Property, Plant and Equipment(Net PPE) was $367 Mil.
Depreciation, Depletion and Amortization(DDA) was $82 Mil.
Selling, General & Admin. Expense(SGA) was $492 Mil.
Total Current Liabilities was $842 Mil.
Long-Term Debt was $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)
=(622.2 / 2617) / (499.3 / 2300.8)
=0.23775315 / 0.21701147
=1.0956

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)
=(214.8 / 2300.8) / (214.8 / 2617)
=0.31376043 / 0.32139855
=0.9762

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 - (1757.6 + 443) / 3812.5) / (1 - (1570.6 + 367.4) / 3365.8)
=0.42279344 / 0.42420821
=0.9967

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
=2617 / 2300.8
=1.1374

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))
=(81.7 / (81.7 + 367.4)) / (84.5 / (84.5 + 443))
=0.18191939 / 0.16018957
=1.1357

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)
=(498 / 2617) / (492.4 / 2300.8)
=0.19029423 / 0.21401252
=0.8892

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 + 839.9) / 3812.5) / ((0 + 841.5) / 3365.8)
=0.22030164 / 0.25001486
=0.8812

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
=(512.4 - -4 - 241.3) / 3812.5
=0.0722

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.

ITT Corp has a M-score of -1.87 signals that the company is likely to 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.

ITT Corp Annual Data

Dec04Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13
DSRI 1.00230.98780.96261.30190.78020.98261.07311.0571.05761.0065
GMI 1.01661.23830.97820.9831.02480.99170.9720.93421.01240.9532
AQI 1.10130.89610.89531.11681.05931.01121.0510.78521.00731.0135
SGI 1.20221.0981.05121.15311.29890.93241.00830.19271.05131.1208
DEPI 1.03260.88861.0011.19020.72711.00451.10131.06351.16160.9451
SGAI 0.99970.98431.04420.99020.98821.12871.07662.18990.53340.9882
LVGI 1.13561.06061.00721.17180.83490.84710.90640.69271.04180.936
TATA -0.0136-0.0125-0.0359-0.0023-0.0289-0.0553-0.0352-0.0834-0.03350.0705
M-score -2.35-2.41-2.70-2.07-2.49-2.79-2.54-3.76-2.44-2.04

ITT Corp Quarterly Data

Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14
DSRI 1.030.97361.00331.05751.1991.16121.36151.00661.11381.0956
GMI 0.93840.93170.92861.01231.00070.98520.97270.95330.96070.9762
AQI 0.41990.92230.79291.00730.98770.98251.04881.01351.01310.9967
SGI -0.0057-0.2199-0.41911.05141.06611.08581.12271.12071.13461.1374
DEPI 21.4931-0.5379-0.32091.16161.04961.0221.01970.94511.09921.1357
SGAI 2.06561.99421.85550.53260.52730.54570.52090.92850.93630.8892
LVGI 0.76160.7660.55821.04181.09451.09520.99510.9360.88230.8812
TATA -0.111-0.1249-0.0885-0.0323-0.017-0.01220.09840.07190.07350.0722
M-score -1.88-4.52-4.43-2.44-2.27-2.28-1.49-2.02-1.87-1.87
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