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ITT Corp (NYSE:ITT)
Beneish M-Score
-2.17 (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.

ITT Corp has a M-score of -2.17 signals that the company is a manipulator.

ITT' s Beneish M-Score Range Over the Past 10 Years
Min: -3.07   Max: 1.65
Current: -2.17

-3.07
1.65

During the past 13 years, the highest Beneish M-Score of ITT Corp was 1.65. The lowest was -3.07. 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 * 1.2409+0.528 * 1.0026+0.404 * 1.1205+0.892 * 0.9363+0.115 * 0.9835
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9076+4.679 * 0.031-0.327 * 1.1988
=-2.17

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

This Year (Dec15) TTM:Last Year (Dec14) TTM:
Accounts Receivable was $554 Mil.
Revenue was 666.8 + 601.9 + 628.2 + 588.7 = $2,486 Mil.
Gross Profit was 201.3 + 194.9 + 213.9 + 199 = $809 Mil.
Total Current Assets was $1,498 Mil.
Total Assets was $3,724 Mil.
Property, Plant and Equipment(Net PPE) was $444 Mil.
Depreciation, Depletion and Amortization(DDA) was $90 Mil.
Selling, General & Admin. Expense(SGA) was $442 Mil.
Total Current Liabilities was $953 Mil.
Long-Term Debt was $0 Mil.
Net Income was 36.7 + 130.7 + 142.3 + 42.1 = $352 Mil.
Non Operating Income was -0.6 + 8 + -0.6 + 0 = $7 Mil.
Cash Flow from Operations was 82.6 + 57.6 + 81.3 + 8.2 = $230 Mil.
Accounts Receivable was $477 Mil.
Revenue was 660 + 657.1 + 663 + 674.5 = $2,655 Mil.
Gross Profit was 216.9 + 219.9 + 214.8 + 214.8 = $866 Mil.
Total Current Assets was $1,636 Mil.
Total Assets was $3,632 Mil.
Property, Plant and Equipment(Net PPE) was $444 Mil.
Depreciation, Depletion and Amortization(DDA) was $88 Mil.
Selling, General & Admin. Expense(SGA) was $520 Mil.
Total Current Liabilities was $775 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)
=(554 / 2485.6) / (476.8 / 2654.6)
=0.22288381 / 0.17961275
=1.2409

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)
=(194.9 / 2654.6) / (201.3 / 2485.6)
=0.32637686 / 0.32551497
=1.0026

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 - (1497.7 + 443.5) / 3723.6) / (1 - (1636.2 + 443.9) / 3631.5)
=0.47867655 / 0.42720639
=1.1205

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
=2485.6 / 2654.6
=0.9363

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))
=(88.3 / (88.3 + 443.9)) / (90 / (90 + 443.5))
=0.16591507 / 0.16869728
=0.9835

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)
=(441.5 / 2485.6) / (519.5 / 2654.6)
=0.17762311 / 0.19569803
=0.9076

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 + 953.1) / 3723.6) / ((0 + 775.4) / 3631.5)
=0.25596197 / 0.21352058
=1.1988

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
=(351.8 - 6.8 - 229.7) / 3723.6
=0.031

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 -2.17 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

Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15
DSRI 0.97041.30190.78020.97996.25710.15971.10241.02630.96671.2409
GMI 0.99690.9831.02480.98260.8871.03281.01290.95320.98141.0026
AQI 0.91231.11241.05930.99481.06830.78681.00521.01350.96931.1205
SGI 1.1091.15311.29890.91270.17711.10311.06821.12081.06320.9363
DEPI 0.97011.19020.72711.01354.26690.27861.13430.94511.02080.9835
SGAI 1.02750.99020.98821.13982.28340.90750.53531.10930.94680.9076
LVGI 0.95881.21260.83490.84890.90450.68931.0470.94620.94881.1988
TATA -0.0361-0.0023-0.0289-0.0544-0.03220.0522-0.03440.0717-0.01420.0316
M-score -2.61-2.09-2.49-2.821.63-2.95-2.40-2.04-2.51-2.17

ITT Corp Quarterly Data

Sep13Dec13Mar14Jun14Sep14Dec14Mar15Jun15Sep15Dec15
DSRI 1.08911.02631.10541.07270.98760.96670.89811.01691.06011.2409
GMI 0.95150.95320.96070.97650.97790.98140.9710.95850.97691.0026
AQI 1.17611.01351.01310.99670.93170.96930.98131.0061.01721.1205
SGI 1.11491.12081.13021.12841.09741.06321.00220.96830.93890.9363
DEPI 0.93650.94511.10831.14931.1341.02080.930.92730.93980.9835
SGAI 0.66321.1441.11651.05321.05210.94680.9330.94210.93740.9076
LVGI 1.01590.94620.88230.88120.96830.94881.05961.03590.93741.1988
TATA 0.09070.07050.07140.0692-0.0255-0.0148-0.01820.01530.02460.031
M-score -1.78-2.05-1.92-1.94-2.55-2.52-2.70-2.45-2.35-2.17
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