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GuruFocus has detected 6 Warning Signs with EnPro Industries Inc $NPO.
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EnPro Industries Inc (NYSE:NPO)
Beneish M-Score
-2.81 (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.

EnPro Industries Inc has a M-score of -2.81 suggests that the company is not a manipulator.

NPO' s Beneish M-Score Range Over the Past 10 Years
Min: -3.59   Max: -2.15
Current: -2.81

-3.59
-2.15

During the past 13 years, the highest Beneish M-Score of EnPro Industries Inc was -2.15. The lowest was -3.59. And the median was -2.61.


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 EnPro Industries Inc 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 * 0.9931+0.528 * 0.9881+0.404 * 1.0155+0.892 * 0.9861+0.115 * 1.0285
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0174+4.679 * -0.0619-0.327 * 1.0817
=-2.81

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

This Year (Dec16) TTM:Last Year (Dec15) TTM:
Accounts Receivable was $208 Mil.
Revenue was 286.9 + 292.7 + 313.2 + 294.9 = $1,188 Mil.
Gross Profit was 90.6 + 98.6 + 107.9 + 97.6 = $395 Mil.
Total Current Assets was $525 Mil.
Total Assets was $1,546 Mil.
Property, Plant and Equipment(Net PPE) was $215 Mil.
Depreciation, Depletion and Amortization(DDA) was $57 Mil.
Selling, General & Admin. Expense(SGA) was $304 Mil.
Total Current Liabilities was $303 Mil.
Long-Term Debt was $708 Mil.
Net Income was -2.9 + 6 + 3.6 + -46.8 = $-40 Mil.
Non Operating Income was -3.5 + -1.3 + -2.5 + -1.6 = $-9 Mil.
Cash Flow from Operations was 56.6 + 10.9 + 25.4 + -28.4 = $65 Mil.
Accounts Receivable was $213 Mil.
Revenue was 321.9 + 306.6 + 298.4 + 277.5 = $1,204 Mil.
Gross Profit was 103 + 101.4 + 101.3 + 89.8 = $396 Mil.
Total Current Assets was $518 Mil.
Total Assets was $1,499 Mil.
Property, Plant and Equipment(Net PPE) was $212 Mil.
Depreciation, Depletion and Amortization(DDA) was $58 Mil.
Selling, General & Admin. Expense(SGA) was $303 Mil.
Total Current Liabilities was $279 Mil.
Long-Term Debt was $627 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)
=(208.1 / 1187.7) / (212.5 / 1204.4)
=0.1752126 / 0.1764364
=0.9931

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)
=(395.5 / 1204.4) / (394.7 / 1187.7)
=0.32837928 / 0.33232298
=0.9881

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 - (524.9 + 215.4) / 1546.4) / (1 - (517.9 + 211.5) / 1498.8)
=0.52127522 / 0.51334401
=1.0155

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
=1187.7 / 1204.4
=0.9861

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))
=(58.1 / (58.1 + 211.5)) / (57.1 / (57.1 + 215.4))
=0.21550445 / 0.20954128
=1.0285

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)
=(303.8 / 1187.7) / (302.8 / 1204.4)
=0.2557885 / 0.25141149
=1.0174

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)
=((708 + 303) / 1546.4) / ((627.2 + 278.7) / 1498.8)
=0.65377651 / 0.60441687
=1.0817

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
=(-40.1 - -8.9 - 64.5) / 1546.4
=-0.0619

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.

EnPro Industries Inc has a M-score of -2.81 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 local exchange's currency.

EnPro Industries Inc Annual Data

Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15Dec16
DSRI 1.54850.87591.10880.73331.07540.89481.06760.99721.04840.9931
GMI 0.9470.96921.03720.92831.09261.01471.01390.97511.04070.9881
AQI 0.97711.01250.88420.96851.21751.02470.93440.92591.0281.0155
SGI 1.10940.96490.8081.07721.2781.07120.96621.06560.98780.9861
DEPI 1.01550.96860.99460.81070.96740.98860.99321.03561.0391.0285
SGAI 1.36281.02561.51610.68680.80830.97121.03391.04910.95951.0174
LVGI 1.03050.92821.05591.60291.01510.98681.01791.0811.161.0817
TATA -0.0443-0.0316-0.19150.0574-0.032-0.0554-0.0259-0.0147-0.0689-0.0619
M-score -2.19-2.77-3.58-2.60-2.15-2.75-2.60-2.57-2.78-2.81

EnPro Industries Inc Quarterly Data

Sep14Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16Dec16
DSRI 1.04760.99720.92030.871.00681.04841.0161.05510.97610.9931
GMI 1.00060.97510.98880.98421.01281.04071.02691.0180.99810.9881
AQI 0.86880.92591.02991.01881.05011.0280.9530.9811.01021.0155
SGI 1.02651.06561.05691.03741.01740.98781.01011.03491.01990.9861
DEPI 0.98771.03561.04481.06261.11521.0391.0451.05061.02391.0285
SGAI 1.03651.04911.02980.99120.98260.95950.96880.97790.98821.0174
LVGI 1.09421.0811.2121.34481.12331.161.081.05421.06391.0817
TATA 0.0077-0.0147-0.0197-0.0578-0.0764-0.0689-0.0927-0.0673-0.0555-0.0619
M-score -2.47-2.57-2.66-2.94-2.81-2.78-2.91-2.72-2.76-2.81
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