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ITT Corp (NYSE:ITT)
Beneish M-Score
-2.15 (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 -2.15 signals that the company is a manipulator.

ITT' s Beneish M-Score Range Over the Past 10 Years
Min: -3.23   Max: 4.33
Current: -2.15

-3.23
4.33

During the past 13 years, the highest Beneish M-Score of ITT Corp was 4.33. The lowest was -3.23. 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 * 1.1722+0.528 * 1.0303+0.404 * 1.1146+0.892 * 0.9756+0.115 * 0.9849
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9265+4.679 * 0.0297-0.327 * 1.0722
=-2.15

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

This Year (Mar16) TTM:Last Year (Mar15) TTM:
Accounts Receivable was $587 Mil.
Revenue was 609.1 + 666.8 + 601.9 + 628.2 = $2,506 Mil.
Gross Profit was 195.3 + 201.3 + 194.9 + 213.9 = $805 Mil.
Total Current Assets was $1,566 Mil.
Total Assets was $3,809 Mil.
Property, Plant and Equipment(Net PPE) was $443 Mil.
Depreciation, Depletion and Amortization(DDA) was $95 Mil.
Selling, General & Admin. Expense(SGA) was $446 Mil.
Total Current Liabilities was $954 Mil.
Long-Term Debt was $0 Mil.
Net Income was 37.4 + 36.7 + 130.7 + 142.3 = $347 Mil.
Non Operating Income was 0 + -0.6 + 8 + -0.6 = $7 Mil.
Cash Flow from Operations was 5.7 + 82.6 + 57.6 + 81.3 = $227 Mil.
Accounts Receivable was $513 Mil.
Revenue was 588.7 + 660 + 657.1 + 663 = $2,569 Mil.
Gross Profit was 199 + 216.9 + 219.9 + 214.8 = $851 Mil.
Total Current Assets was $1,639 Mil.
Total Assets was $3,573 Mil.
Property, Plant and Equipment(Net PPE) was $419 Mil.
Depreciation, Depletion and Amortization(DDA) was $88 Mil.
Selling, General & Admin. Expense(SGA) was $494 Mil.
Total Current Liabilities was $835 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)
=(587 / 2506) / (513.3 / 2568.8)
=0.23423783 / 0.19982093
=1.1722

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)
=(850.6 / 2568.8) / (805.4 / 2506)
=0.33112737 / 0.32138867
=1.0303

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 - (1566.2 + 443) / 3809.2) / (1 - (1638.7 + 419.3) / 3572.6)
=0.47254017 / 0.42394894
=1.1146

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
=2506 / 2568.8
=0.9756

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))
=(87.9 / (87.9 + 419.3)) / (94.6 / (94.6 + 443))
=0.17330442 / 0.17596726
=0.9849

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)
=(446.4 / 2506) / (493.9 / 2568.8)
=0.17813248 / 0.19226876
=0.9265

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 + 954) / 3809.2) / ((0 + 834.5) / 3572.6)
=0.25044629 / 0.23358338
=1.0722

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
=(347.1 - 6.8 - 227.2) / 3809.2
=0.0297

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 -2.15 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 1.02371.30190.78020.95921.09920.91421.121.02630.96671.2409
GMI 0.97820.9831.02480.99170.9720.93421.01240.95320.98141.0026
AQI 0.91231.11241.05930.99481.06830.78681.00521.01350.96931.1205
SGI 1.05121.15311.29890.93241.00830.19271.05131.12081.06320.9363
DEPI 1.06131.19020.72711.00381.10221.05661.16920.94511.02080.9835
SGAI 1.04420.99020.98821.12871.07662.18990.53340.98820.94680.9076
LVGI 0.95881.21260.83490.84890.90450.68931.0470.94620.94881.1988
TATA -0.0361-0.0023-0.0289-0.0553-0.0352-0.0839-0.03350.0705-0.01580.0316
M-score -2.62-2.09-2.49-2.82-2.50-3.89-2.39-2.02-2.52-2.17

ITT Corp Quarterly Data

Dec13Mar14Jun14Sep14Dec14Mar15Jun15Sep15Dec15Mar16
DSRI 1.02631.10541.07270.98760.96670.89811.01691.06011.24091.1722
GMI 0.95320.96070.97650.97790.98140.9710.95850.97691.00261.0303
AQI 1.01351.01310.99670.93170.96930.98131.0061.01721.12051.1146
SGI 1.12081.13021.12841.09741.06321.00220.96830.93890.93630.9756
DEPI 0.94511.10831.14931.1341.02080.930.92730.93980.98350.9849
SGAI 1.1441.11651.05321.05210.94680.9330.94210.93740.90760.9265
LVGI 0.94620.88230.88120.96830.94881.05961.03590.93741.19881.0722
TATA 0.07050.07140.0692-0.0255-0.0148-0.01820.01530.02460.0310.0297
M-score -2.05-1.92-1.94-2.55-2.52-2.70-2.45-2.35-2.17-2.15
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