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Pentair PLC (NYSE:PNR)
Beneish M-Score
-2.84 (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 -2.84 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: -2.84

-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 * 1.0668+0.528 * 1.0388+0.404 * 1.0622+0.892 * 0.9533+0.115 * 0.9634
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9811+4.679 * -0.0812-0.327 * 1.1458
=-2.84

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

This Year (Mar16) TTM:Last Year (Mar15) TTM:
Accounts Receivable was $1,269 Mil.
Revenue was 1575.5 + 1760.7 + 1552.1 + 1661.2 = $6,550 Mil.
Gross Profit was 535.4 + 569.3 + 540.1 + 566.2 = $2,211 Mil.
Total Current Assets was $3,006 Mil.
Total Assets was $12,030 Mil.
Property, Plant and Equipment(Net PPE) was $952 Mil.
Depreciation, Depletion and Amortization(DDA) was $272 Mil.
Selling, General & Admin. Expense(SGA) was $1,357 Mil.
Total Current Liabilities was $1,468 Mil.
Long-Term Debt was $4,837 Mil.
Net Income was 107.4 + -453.3 + 115.2 + 147.8 = $-83 Mil.
Non Operating Income was 0.9 + 133.8 + -61.7 + -36.6 = $36 Mil.
Cash Flow from Operations was -15 + 343.4 + 210.4 + 318.7 = $858 Mil.
Accounts Receivable was $1,248 Mil.
Revenue was 1475 + 1802.5 + 1758.4 + 1834.1 = $6,870 Mil.
Gross Profit was 510.2 + 627.9 + 624.7 + 646.3 = $2,409 Mil.
Total Current Assets was $2,977 Mil.
Total Assets was $10,569 Mil.
Property, Plant and Equipment(Net PPE) was $915 Mil.
Depreciation, Depletion and Amortization(DDA) was $249 Mil.
Selling, General & Admin. Expense(SGA) was $1,451 Mil.
Total Current Liabilities was $1,431 Mil.
Long-Term Debt was $3,403 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)
=(1268.7 / 6549.5) / (1247.5 / 6870)
=0.19370944 / 0.18158661
=1.0668

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)
=(2409.1 / 6870) / (2211 / 6549.5)
=0.35066958 / 0.33758302
=1.0388

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 - (3005.9 + 951.8) / 12030.2) / (1 - (2976.9 + 915.4) / 10569.4)
=0.6710196 / 0.63173879
=1.0622

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
=6549.5 / 6870
=0.9533

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))
=(249.4 / (249.4 + 915.4)) / (272 / (272 + 951.8))
=0.21411401 / 0.22225854
=0.9634

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)
=(1356.7 / 6549.5) / (1450.5 / 6870)
=0.20714558 / 0.21113537
=0.9811

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)
=((4837.1 + 1467.6) / 12030.2) / ((3403.4 + 1431.1) / 10569.4)
=0.52407275 / 0.45740534
=1.1458

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
=(-82.9 - 36.4 - 857.5) / 12030.2
=-0.0812

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 -2.84 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 0.93031.01451.01321.22881.0090.96551.75280.59520.99721.0569
GMI 1.00180.95290.99611.0380.94970.98851.08050.86960.94491.0324
AQI 0.98121.05331.0161.01850.96320.99630.97641.00871.00531.0731
SGI 1.07061.07740.98630.80321.12561.14051.27761.69370.94110.9162
DEPI 1.01920.97750.9360.84281.18010.93291.80080.56341.02350.9694
SGAI 1.05561.00821.04691.04050.92691.03781.44730.79621.01610.9749
LVGI 0.94421.08410.89450.89190.98411.34960.8131.02641.2291.2008
TATA -0.0143-0.0317-0.0191-0.0349-0.0188-0.0628-0.0086-0.0341-0.0746-0.0688
M-score -2.54-2.58-2.55-2.57-2.45-2.82-1.47-2.48-2.99-2.84

Pentair PLC Quarterly Data

Dec13Mar14Jun14Sep14Dec14Mar15Jun15Sep15Dec15Mar16
DSRI 0.59620.73380.88710.91220.97090.92060.94261.04791.05691.0668
GMI 0.87880.83430.85370.88940.95610.98751.00551.00891.03241.0388
AQI 1.00871.00861.00920.96021.00531.01841.01731.10061.07311.0622
SGI 1.6911.36931.12440.99640.96660.96060.95370.91840.91620.9533
DEPI 0.5690.81811.02211.29080.99320.85070.8250.94850.96940.9634
SGAI 0.80850.78680.80480.8161.01081.03041.00091.05840.97490.9811
LVGI 1.02641.09071.02511.1771.2291.20621.14951.2071.20081.1458
TATA -0.0323-0.0266-0.0271-0.0604-0.0776-0.0658-0.0583-0.018-0.0718-0.0812
M-score -2.47-2.62-2.65-2.91-3.00-2.99-2.91-2.63-2.86-2.84
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