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Pentair PLC (NYSE:PNR)
Beneish M-Score
-2.94 (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.

Pentair PLC has a M-score of -2.94 suggests that the company is not a manipulator.

PNR' s 10-Year Beneish M-Score Range
Min: -3.17   Max: -1.23
Current: -2.94

-3.17
-1.23

During the past 13 years, the highest Beneish M-Score of Pentair PLC was -1.23. The lowest was -3.17. And the median was -2.50.


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 Pentair PLC 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 * 0.9092+0.528 * 0.8887+0.404 * 0.9602+0.892 * 0.9997+0.115 * 1.3181
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.8173+4.679 * -0.0666-0.327 * 1.177
=-2.94

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

This Year (Sep14) TTM:Last Year (Sep13) TTM:
Accounts Receivable was $1,181 Mil.
Revenue was 1758.4 + 1910.8 + 1725.2 + 1916.7 = $7,311 Mil.
Gross Profit was 624.7 + 658.9 + 578.3 + 644.1 = $2,506 Mil.
Total Current Assets was $3,052 Mil.
Total Assets was $10,927 Mil.
Property, Plant and Equipment(Net PPE) was $991 Mil.
Depreciation, Depletion and Amortization(DDA) was $252 Mil.
Selling, General & Admin. Expense(SGA) was $1,468 Mil.
Total Current Liabilities was $1,669 Mil.
Long-Term Debt was $2,961 Mil.
Net Income was -186 + 161.5 + 118.6 + 158.2 = $252 Mil.
Non Operating Income was 0.3 + 0.2 + 7.6 + 3.1 = $11 Mil.
Cash Flow from Operations was 268.4 + 414.4 + 0.6 + 285.5 = $969 Mil.
Accounts Receivable was $1,299 Mil.
Revenue was 1824.8 + 1963.7 + 1774 + 1750.932 = $7,313 Mil.
Gross Profit was 637.6 + 667.4 + 524 + 398.668 = $2,228 Mil.
Total Current Assets was $3,211 Mil.
Total Assets was $11,804 Mil.
Property, Plant and Equipment(Net PPE) was $848 Mil.
Depreciation, Depletion and Amortization(DDA) was $310 Mil.
Selling, General & Admin. Expense(SGA) was $1,797 Mil.
Total Current Liabilities was $1,678 Mil.
Long-Term Debt was $2,571 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)
=(1180.9 / 7311.1) / (1299.2 / 7313.432)
=0.16152152 / 0.17764573
=0.9092

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)
=(658.9 / 7313.432) / (624.7 / 7311.1)
=0.30459954 / 0.34276648
=0.8887

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 - (3052.4 + 990.8) / 10926.9) / (1 - (3211.3 + 848.4) / 11804.2)
=0.6299774 / 0.65608004
=0.9602

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
=7311.1 / 7313.432
=0.9997

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))
=(309.608 / (309.608 + 848.4)) / (252.1 / (252.1 + 990.8))
=0.26736257 / 0.20283209
=1.3181

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)
=(1468.1 / 7311.1) / (1796.816 / 7313.432)
=0.20080426 / 0.24568711
=0.8173

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)
=((2960.7 + 1668.7) / 10926.9) / ((2570.7 + 1678.4) / 11804.2)
=0.42367003 / 0.3599651
=1.177

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
=(252.3 - 11.2 - 968.9) / 10926.9
=-0.0666

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.

Pentair PLC has a M-score of -2.94 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.

Pentair PLC Annual Data

Dec04Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13
DSRI 1.1370.82660.97091.0070.97811.22881.0090.96551.77760.6094
GMI 0.9450.99860.97080.96041.01981.0380.94970.98851.08050.8696
AQI 1.01611.0020.98121.05331.0161.01850.96320.99630.961.0087
SGI 1.38661.29341.02581.08551.02170.80321.12561.14051.27761.6937
DEPI 1.05290.81241.03310.97740.92350.84281.18010.93291.84910.6005
SGAI 1.07150.98471.07191.00921.06461.00660.92691.03781.44730.7962
LVGI 0.90610.9760.94421.08410.89450.89190.98411.34960.79761.0474
TATA -0.0178-0.021-0.0133-0.0316-0.0191-0.0349-0.0188-0.0628-0.0086-0.0341
M-score -2.09-2.49-2.56-2.58-2.54-2.56-2.45-2.82-1.44-2.47

Pentair PLC Quarterly Data

Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14
DSRI 0.87232.24551.77761.36431.27690.47530.60950.7210.85910.9092
GMI 0.98050.96761.08051.10531.08061.0560.86940.83420.86110.8887
AQI 0.97570.89910.960.9810.97491.11011.00871.00861.00920.9602
SGI 1.10161.05561.27761.51281.78692.07131.69361.39361.16110.9997
DEPI 0.81242.38441.84911.46911.22870.31740.60050.79580.98181.3181
SGAI 1.07261.13491.44731.40851.36231.20920.79620.77660.79280.8173
LVGI 0.99640.72690.79760.80860.91751.18811.04741.09071.02511.177
TATA -0.0627-0.0251-0.0086-0.0183-0.0226-0.0241-0.034-0.0259-0.0297-0.0666
M-score -2.85-1.23-1.44-1.68-1.61-2.22-2.47-2.61-2.65-2.94
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