Switch to:
ITT Corp (NYSE:ITT)
Beneish M-Score
-2.71 (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 -2.71 suggests that the company is not a manipulator.

ITT' s 10-Year Beneish M-Score Range
Min: -3.85   Max: 4.33
Current: -2.71

-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 * 0.8981+0.528 * 0.971+0.404 * 0.9813+0.892 * 1.0022+0.115 * 0.93
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.933+4.679 * -0.0202-0.327 * 1.0596
=-2.71

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

This Year (Mar15) TTM:Last Year (Mar14) TTM:
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.
Net Income was 42.1 + 33.7 + 80.3 + 38.3 = $194 Mil.
Non Operating Income was 0 + 1.7 + -1.4 + 0 = $0 Mil.
Cash Flow from Operations was 8.2 + 112.8 + 52.1 + 93 = $266 Mil.
Accounts Receivable was $570 Mil.
Revenue was 674.5 + 645.5 + 634 + 609.2 = $2,563 Mil.
Gross Profit was 214.8 + 208.6 + 202.9 + 197.8 = $824 Mil.
Total Current Assets was $1,714 Mil.
Total Assets was $3,784 Mil.
Property, Plant and Equipment(Net PPE) was $435 Mil.
Depreciation, Depletion and Amortization(DDA) was $84 Mil.
Selling, General & Admin. Expense(SGA) was $528 Mil.
Total Current Liabilities was $834 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)
=(513.3 / 2568.8) / (570.3 / 2563.2)
=0.19982093 / 0.22249532
=0.8981

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)
=(216.9 / 2563.2) / (199 / 2568.8)
=0.32151217 / 0.33112737
=0.971

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 - (1638.7 + 419.3) / 3572.6) / (1 - (1714.4 + 434.6) / 3783.7)
=0.42394894 / 0.43203742
=0.9813

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
=2568.8 / 2563.2
=1.0022

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))
=(83.5 / (83.5 + 434.6)) / (87.9 / (87.9 + 419.3))
=0.1611658 / 0.17330442
=0.93

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)
=(493.9 / 2568.8) / (528.2 / 2563.2)
=0.19226876 / 0.20607054
=0.933

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 + 834.5) / 3572.6) / ((0 + 834.1) / 3783.7)
=0.23358338 / 0.2204456
=1.0596

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
=(194.4 - 0.3 - 266.1) / 3572.6
=-0.0202

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 -2.71 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

Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14Dec14Mar15
DSRI 1.10230.97681.01881.08911.02631.10541.07270.98760.96670.8981
GMI 1.01280.98790.96130.95150.95320.96070.97650.97790.98140.971
AQI 1.00522.18711.01161.17611.01351.01310.99670.93170.96930.9813
SGI 1.06821.06951.09081.11491.12081.13021.12841.09741.06321.0022
DEPI 1.13430.31670.95090.93650.94511.10831.14931.1341.02080.93
SGAI 0.45560.50840.54190.57051.1441.11651.05321.05210.94680.933
LVGI 1.0471.01261.00441.01590.94620.88230.88120.96830.95741.0596
TATA -0.0335-0.019-0.01370.09070.06930.07020.069-0.027-0.0167-0.0202
M-score -2.38-2.05-2.39-1.76-2.06-1.92-1.94-2.55-2.53-2.71
Get WordPress Plugins for easy affiliate links on Stock Tickers and Guru Names | Earn affiliate commissions by embedding GuruFocus Charts
GuruFocus Affiliate Program: Earn up to $400 per referral. ( Learn More)

GuruFocus Premium Plus Membership

FEEDBACK