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Pentair PLC (NYSE:PNR)
Beneish M-Score
-2.99 (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 -2.99 suggests that the company is not a manipulator.

PNR' s Beneish M-Score Range Over the Past 10 Years
Min: -3.08   Max: -1.26
Current: -2.99

-3.08
-1.26

During the past 13 years, the highest Beneish M-Score of Pentair PLC was -1.26. The lowest was -3.08. And the median was -2.52.


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 * 0.9385+0.528 * 1.0262+0.404 * 1.0675+0.892 * 0.9887+0.115 * 0.9283
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0156+4.679 * -0.0924-0.327 * 1.1372
=-2.99

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

This Year (Jun16) TTM:Last Year (Jun15) TTM:
Accounts Receivable was $1,086 Mil.
Revenue was 1733.3 + 1575.5 + 1760.7 + 1552.1 = $6,622 Mil.
Gross Profit was 599.2 + 535.4 + 569.3 + 540.1 = $2,244 Mil.
Total Current Assets was $2,793 Mil.
Total Assets was $11,744 Mil.
Property, Plant and Equipment(Net PPE) was $938 Mil.
Depreciation, Depletion and Amortization(DDA) was $282 Mil.
Selling, General & Admin. Expense(SGA) was $1,386 Mil.
Total Current Liabilities was $1,416 Mil.
Long-Term Debt was $4,552 Mil.
Net Income was 142.8 + 107.4 + -453.3 + 115.2 = $-88 Mil.
Non Operating Income was 1 + 0.9 + 133.8 + -61.7 = $74 Mil.
Cash Flow from Operations was 384.5 + -15 + 343.4 + 210.4 = $923 Mil.
Accounts Receivable was $1,171 Mil.
Revenue was 1661.2 + 1475 + 1802.5 + 1758.4 = $6,697 Mil.
Gross Profit was 566.2 + 510.2 + 627.9 + 624.7 = $2,329 Mil.
Total Current Assets was $2,903 Mil.
Total Assets was $10,565 Mil.
Property, Plant and Equipment(Net PPE) was $909 Mil.
Depreciation, Depletion and Amortization(DDA) was $248 Mil.
Selling, General & Admin. Expense(SGA) was $1,380 Mil.
Total Current Liabilities was $1,460 Mil.
Long-Term Debt was $3,261 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)
=(1086.2 / 6621.6) / (1170.6 / 6697.1)
=0.1640389 / 0.17479207
=0.9385

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)
=(2329 / 6697.1) / (2244 / 6621.6)
=0.34776246 / 0.3388909
=1.0262

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 - (2792.8 + 937.6) / 11743.8) / (1 - (2902.9 + 908.5) / 10564.7)
=0.68235154 / 0.63923254
=1.0675

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
=6621.6 / 6697.1
=0.9887

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))
=(248.3 / (248.3 + 908.5)) / (282 / (282 + 937.6))
=0.21464385 / 0.23122335
=0.9283

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)
=(1385.8 / 6621.6) / (1380.1 / 6697.1)
=0.20928477 / 0.20607427
=1.0156

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)
=((4551.7 + 1415.9) / 11743.8) / ((3260.9 + 1460) / 10564.7)
=0.50814898 / 0.44685604
=1.1372

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
=(-87.9 - 74 - 923.3) / 11743.8
=-0.0924

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 -2.99 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

Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15
DSRI 0.97091.0070.97811.22881.0090.96551.79730.62030.93321.0569
GMI 0.97080.96041.01981.0380.94970.98861.05680.86810.96771.0324
AQI 0.98121.05331.0161.01850.96320.99630.97641.00871.00531.0731
SGI 1.02581.08551.02170.80321.12561.14051.24591.62531.00560.9162
DEPI 1.03310.97740.92350.84281.18010.93311.83680.5690.99320.9694
SGAI 1.07191.00921.06461.00660.9641.10661.29110.82230.99450.9749
LVGI 0.94421.08410.89450.89190.98411.34960.8131.02641.2291.2008
TATA -0.0133-0.0316-0.0191-0.0349-0.022-0.0719-0.0065-0.0352-0.0746-0.0688
M-score -2.56-2.58-2.54-2.56-2.47-2.87-1.43-2.53-2.98-2.84

Pentair PLC Quarterly Data

Mar14Jun14Sep14Dec14Mar15Jun15Sep15Dec15Mar16Jun16
DSRI 0.73380.88710.91220.97090.92060.94261.04791.05691.06680.9385
GMI 0.83430.85370.88940.95610.98751.00551.00891.03241.03881.0262
AQI 1.00861.00920.96021.00531.01841.01731.10061.07311.06221.0675
SGI 1.36931.12440.99640.96660.96060.95370.91840.91620.95330.9887
DEPI 0.81811.02211.29080.99320.85070.8250.94850.96940.96340.9283
SGAI 0.78680.80480.8161.01081.03041.00091.05840.97490.98111.0156
LVGI 1.09071.02511.1771.2291.20621.14951.2071.20081.14581.1372
TATA -0.0266-0.0271-0.0604-0.0776-0.0658-0.0618-0.0209-0.075-0.0843-0.0924
M-score -2.62-2.65-2.91-3.00-2.99-2.92-2.64-2.87-2.86-2.99
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