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Pentair PLC (NYSE:PNR)
Beneish M-Score
-3.16 (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 -3.16 suggests that the company is not a manipulator.

PNR' s Beneish M-Score Range Over the Past 10 Years
Min: -3.16   Max: -1.26
Current: -3.16

-3.16
-1.26

During the past 13 years, the highest Beneish M-Score of Pentair PLC was -1.26. The lowest was -3.16. And the median was -2.53.


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 * 0.4805+0.528 * 1.0213+0.404 * 1.0355+0.892 * 1.2627+0.115 * 0.4378
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9948+4.679 * -0.0882-0.327 * 0.9543
=-3.16

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

This Year (Sep16) TTM:Last Year (Sep15) TTM:
Accounts Receivable was $690 Mil.
Revenue was 1210.7 + 1733.3 + 1575.5 + 3121.6 = $7,641 Mil.
Gross Profit was 440.9 + 599.2 + 535.4 + 1019.5 = $2,595 Mil.
Total Current Assets was $2,747 Mil.
Total Assets was $11,679 Mil.
Property, Plant and Equipment(Net PPE) was $547 Mil.
Depreciation, Depletion and Amortization(DDA) was $294 Mil.
Selling, General & Admin. Expense(SGA) was $1,593 Mil.
Total Current Liabilities was $1,288 Mil.
Long-Term Debt was $4,411 Mil.
Net Income was 141 + 142.8 + 107.4 + -453.3 = $-62 Mil.
Non Operating Income was -67.4 + 1 + 0.9 + 133.3 = $68 Mil.
Cash Flow from Operations was 187.3 + 384.5 + -15 + 343.4 = $900 Mil.
Accounts Receivable was $1,137 Mil.
Revenue was 1112.8 + 1661.2 + 1475 + 1802.5 = $6,052 Mil.
Gross Profit was 394.7 + 566.2 + 510.2 + 627.9 = $2,099 Mil.
Total Current Assets was $2,964 Mil.
Total Assets was $12,671 Mil.
Property, Plant and Equipment(Net PPE) was $921 Mil.
Depreciation, Depletion and Amortization(DDA) was $167 Mil.
Selling, General & Admin. Expense(SGA) was $1,268 Mil.
Total Current Liabilities was $1,496 Mil.
Long-Term Debt was $4,983 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)
=(689.5 / 7641.1) / (1136.5 / 6051.5)
=0.0902357 / 0.18780468
=0.4805

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)
=(2099 / 6051.5) / (2595 / 7641.1)
=0.34685615 / 0.33961079
=1.0213

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 - (2747 + 547.3) / 11679) / (1 - (2964.2 + 921.4) / 12670.9)
=0.71792962 / 0.69334459
=1.0355

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
=7641.1 / 6051.5
=1.2627

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))
=(166.5 / (166.5 + 921.4)) / (294.2 / (294.2 + 547.3))
=0.15304716 / 0.34961378
=0.4378

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)
=(1593.1 / 7641.1) / (1268.3 / 6051.5)
=0.20849092 / 0.2095844
=0.9948

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)
=((4411.3 + 1288.1) / 11679) / ((4983.2 + 1496.2) / 12670.9)
=0.48800411 / 0.51136068
=0.9543

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
=(-62.1 - 67.8 - 900.2) / 11679
=-0.0882

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 -3.16 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.

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

Jun14Sep14Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16
DSRI 0.88710.91220.97090.92060.94261.1240.92480.93520.82380.4805
GMI 0.85370.88940.95610.98751.00551.00581.03551.04141.02921.0213
AQI 1.00920.96021.00531.01841.01731.10061.07311.06221.06751.0355
SGI 1.12440.99640.96660.96060.95370.85621.04711.08751.12631.2627
DEPI 1.02211.29080.99320.85070.8251.31480.96940.96340.92830.4378
SGAI 0.80480.8161.01081.03041.00091.04220.97830.98431.01750.9948
LVGI 1.02511.1771.2291.20621.14951.2071.20081.14581.13720.9543
TATA -0.0271-0.0604-0.0776-0.0658-0.0618-0.0209-0.0749-0.0843-0.0924-0.0882
M-score -2.65-2.91-3.00-2.99-2.92-2.59-2.87-2.86-2.98-3.16
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