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Pentair PLC (NYSE:PNR)
Beneish M-Score
-2.66 (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 -2.67 suggests that the company is not a manipulator.

PNR' s 10-Year Beneish M-Score Range
Min: -3.17   Max: -1.26
Current: -2.66

-3.17
-1.26

During the past 13 years, the highest Beneish M-Score of Pentair PLC was -1.26. The lowest was -3.17. And the median was -2.49.


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 * 0.6565+0.528 * 0.834+0.404 * 1.0086+0.892 * 1.3934+0.115 * 0.7951
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.7758+4.679 * -0.0259-0.327 * 1.0907
=-2.67

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

This Year (Mar14) TTM:Last Year (Mar13) TTM:
Accounts Receivable was $1,411 Mil.
Revenue was 1725.2 + 1916.7 + 1824.8 + 1963.7 = $7,430 Mil.
Gross Profit was 578.3 + 644.1 + 637.6 + 667.4 = $2,527 Mil.
Total Current Assets was $3,305 Mil.
Total Assets was $11,767 Mil.
Property, Plant and Equipment(Net PPE) was $1,162 Mil.
Depreciation, Depletion and Amortization(DDA) was $273 Mil.
Selling, General & Admin. Expense(SGA) was $1,515 Mil.
Total Current Liabilities was $1,528 Mil.
Long-Term Debt was $2,934 Mil.
Net Income was 118.6 + 158.2 + 172.8 + 154.1 = $604 Mil.
Non Operating Income was 7.6 + 3.1 + 0.6 + 0.9 = $12 Mil.
Cash Flow from Operations was 0.6 + 285.5 + 243.7 + 366.2 = $896 Mil.
Accounts Receivable was $1,542 Mil.
Revenue was 1774.5 + 1750.9 + 865.5 + 941.5 = $5,332 Mil.
Gross Profit was 523.8 + 398.7 + 278.1 + 312.1 = $1,513 Mil.
Total Current Assets was $3,290 Mil.
Total Assets was $11,721 Mil.
Property, Plant and Equipment(Net PPE) was $1,222 Mil.
Depreciation, Depletion and Amortization(DDA) was $218 Mil.
Selling, General & Admin. Expense(SGA) was $1,401 Mil.
Total Current Liabilities was $1,483 Mil.
Long-Term Debt was $2,592 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)
=(1410.7 / 7430.4) / (1542 / 5332.4)
=0.18985519 / 0.28917561
=0.6565

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)
=(644.1 / 5332.4) / (578.3 / 7430.4)
=0.28368089 / 0.3401432
=0.834

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 - (3305.3 + 1162) / 11766.5) / (1 - (3290 + 1222) / 11721)
=0.6203374 / 0.61504991
=1.0086

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
=7430.4 / 5332.4
=1.3934

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))
=(217.7 / (217.7 + 1222)) / (272.9 / (272.9 + 1162))
=0.15121206 / 0.19018747
=0.7951

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)
=(1514.5 / 7430.4) / (1401 / 5332.4)
=0.20382483 / 0.26273348
=0.7758

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)
=((2933.8 + 1528.1) / 11766.5) / ((2592 + 1483) / 11721)
=0.37920367 / 0.34766658
=1.0907

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
=(603.7 - 12.2 - 896) / 11766.5
=-0.0259

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 -2.67 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 1.1370.82660.97091.0070.97811.22881.0091.05831.75520.6056
GMI 0.9450.99860.97080.96041.01981.0380.94970.98851.08040.8696
AQI 1.01611.0020.98121.05331.0161.01850.96320.99630.97640.9917
SGI 1.38661.29341.02581.08551.02170.80321.12561.14051.27761.6937
DEPI 1.05290.81241.03310.97740.92350.84281.18010.93291.80070.6166
SGAI 1.07150.98471.07191.00921.06461.00660.9641.10671.3050.7962
LVGI 0.90610.9760.94421.08410.89450.89190.98411.34960.8131.0275
TATA -0.0178-0.021-0.0133-0.0316-0.0191-0.0349-0.022-0.0719-0.0086-0.0341
M-score -2.09-2.49-2.56-2.58-2.54-2.56-2.47-2.79-1.44-2.47

Pentair PLC Quarterly Data

Dec11Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14
DSRI 1.05830.96040.87242.24561.75531.49821.40820.47530.60560.6565
GMI 0.98850.98880.98020.96731.08011.10591.08111.05650.86980.834
AQI 0.99630.9980.97570.89910.97640.9810.97491.11010.99171.0086
SGI 1.14051.13181.10151.05561.27751.5131.78712.07151.69381.3934
DEPI 0.93290.89790.81212.3841.80071.47091.22930.31750.61660.7951
SGAI 1.10671.13761.13551.19451.30571.27881.24281.11250.79570.7758
LVGI 1.34961.32710.99640.72690.8130.80860.91751.18811.02751.0907
TATA -0.0719-0.0628-0.0715-0.0284-0.0086-0.0155-0.0199-0.0215-0.0312-0.0259
M-score -2.79-2.84-2.91-1.26-1.44-1.52-1.45-2.19-2.46-2.67
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