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ITT Corp (NYSE:ITT)
Beneish M-Score
-2.46 (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 -2.46 suggests that the company is not a manipulator.

ITT' s 10-Year Beneish M-Score Range
Min: -3.85   Max: 4.33
Current: -2.46

-3.85
4.33

During the past 13 years, the highest Beneish M-Score of ITT Corp was 4.33. The lowest was -3.85. And the median was -2.42.


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 * 1.0169+0.528 * 0.9585+0.404 * 1.006+0.892 * 0.9683+0.115 * 0.9273
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9421+4.679 * 0.0136-0.327 * 1.0359
=-2.46

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

This Year (Jun15) TTM:Last Year (Jun14) TTM:
Accounts Receivable was $539 Mil.
Revenue was 628.2 + 588.7 + 660 + 657.1 = $2,534 Mil.
Gross Profit was 213.9 + 199 + 216.9 + 219.9 = $850 Mil.
Total Current Assets was $1,633 Mil.
Total Assets was $3,576 Mil.
Property, Plant and Equipment(Net PPE) was $421 Mil.
Depreciation, Depletion and Amortization(DDA) was $88 Mil.
Selling, General & Admin. Expense(SGA) was $483 Mil.
Total Current Liabilities was $816 Mil.
Long-Term Debt was $0 Mil.
Net Income was 142.3 + 42.1 + 33.7 + 80.3 = $298 Mil.
Non Operating Income was -0.6 + 0 + 1.7 + -1.4 = $-0 Mil.
Cash Flow from Operations was 81.3 + 8.2 + 112.8 + 47.6 = $250 Mil.
Accounts Receivable was $547 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 $530 Mil.
Total Current Liabilities was $840 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)
=(538.7 / 2534) / (547.1 / 2617)
=0.21258879 / 0.20905617
=1.0169

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)
=(199 / 2617) / (213.9 / 2534)
=0.32139855 / 0.33531965
=0.9585

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 - (1633.4 + 421.4) / 3575.7) / (1 - (1757.6 + 443) / 3812.5)
=0.42534329 / 0.42279344
=1.006

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
=2534 / 2617
=0.9683

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))
=(84.5 / (84.5 + 443)) / (88 / (88 + 421.4))
=0.16018957 / 0.17275226
=0.9273

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)
=(483.4 / 2534) / (529.9 / 2617)
=0.19076559 / 0.20248376
=0.9421

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 + 816) / 3575.7) / ((0 + 839.9) / 3812.5)
=0.22820706 / 0.22030164
=1.0359

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
=(298.4 - -0.3 - 249.9) / 3575.7
=0.0136

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 -2.46 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.

ITT Corp Annual Data

Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14
DSRI 0.91350.97041.30190.78020.97996.25710.15971.10241.02630.9667
GMI 1.00050.99690.9831.02480.98260.8871.03281.01290.95320.9814
AQI 0.89350.91231.11241.05930.99481.06830.78681.00521.01350.9693
SGI 1.18031.1091.15311.29890.91270.17711.10311.06821.12081.0632
DEPI 0.82050.97011.19020.72711.01354.26690.27861.13430.94511.0208
SGAI 0.94571.02750.99020.98821.13982.28341.03310.47021.10930.9468
LVGI 1.06850.95881.21260.83490.84890.90450.69261.0420.94620.9574
TATA -0.0124-0.0361-0.0023-0.0289-0.0544-0.0322-0.1007-0.03440.0705-0.0158
M-score -2.53-2.61-2.09-2.49-2.821.63-3.69-2.38-2.04-2.52

ITT Corp Quarterly Data

Mar13Jun13Sep13Dec13Mar14Jun14Sep14Dec14Mar15Jun15
DSRI 0.97681.01881.08911.02631.10541.07270.98760.96670.89811.0169
GMI 0.98790.96130.95150.95320.96070.97650.97790.98140.9710.9585
AQI 2.18711.01161.17611.01351.01310.99670.93170.96930.98131.006
SGI 1.06951.09081.11491.12081.13021.12841.09741.06321.00220.9683
DEPI 0.31670.95090.93650.94511.10831.14931.1341.02080.930.9273
SGAI 0.50840.54190.57051.1441.11651.05321.05210.94680.9330.9421
LVGI 1.01261.00441.01590.94620.88230.88120.96830.95741.05961.0359
TATA -0.019-0.01370.09070.06930.07020.0681-0.0267-0.0164-0.01990.0136
M-score -2.05-2.39-1.76-2.06-1.92-1.95-2.55-2.53-2.70-2.46
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