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Pentair PLC (NYSE:PNR)
Beneish M-Score
-2.98 (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 -2.98 suggests that the company is not a manipulator.

PNR' s 10-Year Beneish M-Score Range
Min: -2.98   Max: -1.45
Current: -2.98

-2.98
-1.45

During the past 13 years, the highest Beneish M-Score of Pentair PLC was -1.45. The lowest was -2.98. 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 * 0.9496+0.528 * 0.9671+0.404 * 1.0053+0.892 * 0.9882+0.115 * 0.9932
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0061+4.679 * -0.0753-0.327 * 1.229
=-2.98

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

This Year (Dec14) TTM:Last Year (Dec13) TTM:
Accounts Receivable was $1,206 Mil.
Revenue was 1802.5 + 1758.4 + 1910.8 + 1725.2 = $7,197 Mil.
Gross Profit was 627.9 + 624.7 + 658.9 + 578.3 = $2,490 Mil.
Total Current Assets was $2,894 Mil.
Total Assets was $10,655 Mil.
Property, Plant and Equipment(Net PPE) was $950 Mil.
Depreciation, Depletion and Amortization(DDA) was $253 Mil.
Selling, General & Admin. Expense(SGA) was $1,520 Mil.
Total Current Liabilities was $1,640 Mil.
Long-Term Debt was $2,997 Mil.
Net Income was 120.8 + -186 + 161.5 + 118.6 = $215 Mil.
Non Operating Income was 0.3 + 0.3 + 0.2 + 7.6 = $8 Mil.
Cash Flow from Operations was 325 + 268.4 + 414.4 + 0.6 = $1,008 Mil.
Accounts Receivable was $1,285 Mil.
Revenue was 1831 + 1713.3 + 1963.7 + 1774.5 = $7,283 Mil.
Gross Profit was 630.5 + 614.7 + 667.4 + 523.8 = $2,436 Mil.
Total Current Assets was $3,232 Mil.
Total Assets was $11,743 Mil.
Property, Plant and Equipment(Net PPE) was $1,044 Mil.
Depreciation, Depletion and Amortization(DDA) was $275 Mil.
Selling, General & Admin. Expense(SGA) was $1,529 Mil.
Total Current Liabilities was $1,610 Mil.
Long-Term Debt was $2,548 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)
=(1205.9 / 7196.9) / (1285 / 7282.5)
=0.16755825 / 0.17645039
=0.9496

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)
=(624.7 / 7282.5) / (627.9 / 7196.9)
=0.33455544 / 0.34595451
=0.9671

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 - (2894.1 + 950) / 10655.2) / (1 - (3232.1 + 1044.3) / 11743.3)
=0.63922779 / 0.63584342
=1.0053

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
=7196.9 / 7282.5
=0.9882

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))
=(275.4 / (275.4 + 1044.3)) / (252.7 / (252.7 + 950))
=0.20868379 / 0.21011058
=0.9932

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)
=(1520.3 / 7196.9) / (1529 / 7282.5)
=0.21124373 / 0.20995537
=1.0061

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)
=((2997.4 + 1639.5) / 10655.2) / ((2547.9 + 1610.2) / 11743.3)
=0.43517719 / 0.35408275
=1.229

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
=(214.9 - 8.4 - 1008.4) / 10655.2
=-0.0753

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 -2.98 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

Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14
DSRI 0.82660.97091.0070.97811.22881.0090.96551.75280.6360.9332
GMI 0.99860.97080.96041.01981.0380.94970.98851.08040.84910.9677
AQI 1.0020.98121.05331.0161.01850.96320.99630.97641.00871.0053
SGI 1.29341.02581.08551.02170.80321.12561.14051.27761.5851.0056
DEPI 0.81241.03310.97740.92350.84281.18010.93291.80070.58060.9932
SGAI 0.98471.07191.00921.06461.00660.9641.10671.3050.81350.9945
LVGI 0.9760.94421.08410.89450.89190.98411.34960.8131.02641.229
TATA -0.021-0.0133-0.0316-0.0191-0.0349-0.022-0.0719-0.0086-0.0352-0.0746
M-score -2.49-2.56-2.58-2.54-2.56-2.47-2.87-1.45-2.56-2.98

Pentair PLC Quarterly Data

Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14Dec14
DSRI 2.24561.75291.36411.27680.48260.61130.74070.88280.90610.9496
GMI 0.96731.08011.10591.08111.05120.85960.82380.85030.88740.9671
AQI 0.89910.97640.9810.97491.11011.00871.00861.00920.96021.0053
SGI 1.05561.27751.5131.78712.03991.64921.35651.12991.00320.9882
DEPI 2.3841.80071.47091.22930.32380.58060.82131.01541.30270.9932
SGAI 1.19451.30571.27881.24281.12170.79990.77950.79530.80681.0061
LVGI 0.72690.8130.80860.91751.18811.02641.09071.02511.1771.229
TATA -0.0284-0.0086-0.0155-0.0199-0.0219-0.0324-0.0271-0.0309-0.0675-0.0753
M-score -1.26-1.45-1.64-1.57-2.22-2.50-2.63-2.66-2.94-2.98
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