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Pentair PLC (NYSE:PNR)
Beneish M-Score
-2.97 (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 -2.97 suggests that the company is not a manipulator.

PNR' s 10-Year Beneish M-Score Range
Min: -3.17   Max: -1.23
Current: -2.97

-3.17
-1.23

During the past 13 years, the highest Beneish M-Score of Pentair PLC was -1.23. The lowest was -3.17. And the median was -2.51.


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 * 0.9459+0.528 * 0.9757+0.404 * 1.0184+0.892 * 0.9349+0.115 * 0.8976
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0319+4.679 * -0.063-0.327 * 1.2062
=-2.97

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

This Year (Mar15) TTM:Last Year (Mar14) TTM:
Accounts Receivable was $1,248 Mil.
Revenue was 1475 + 1802.5 + 1758.4 + 1910.8 = $6,947 Mil.
Gross Profit was 510.2 + 627.9 + 624.7 + 658.9 = $2,422 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 $246 Mil.
Selling, General & Admin. Expense(SGA) was $1,461 Mil.
Total Current Liabilities was $1,431 Mil.
Long-Term Debt was $3,403 Mil.
Net Income was 113.9 + 120.8 + -186 + 161.5 = $210 Mil.
Non Operating Income was 0.5 + 0.3 + 0.3 + 0.2 = $1 Mil.
Cash Flow from Operations was -133.2 + 325 + 268.4 + 414.4 = $875 Mil.
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.



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)
=(1247.5 / 6946.7) / (1410.7 / 7430.4)
=0.17958167 / 0.18985519
=0.9459

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)
=(627.9 / 7430.4) / (510.2 / 6946.7)
=0.3401432 / 0.34861157
=0.9757

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 - (2976.9 + 915.4) / 10569.4) / (1 - (3305.3 + 1162) / 11766.5)
=0.63173879 / 0.6203374
=1.0184

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
=6946.7 / 7430.4
=0.9349

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))
=(272.8 / (272.8 + 1162)) / (246 / (246 + 915.4))
=0.19013103 / 0.21181333
=0.8976

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)
=(1461.1 / 6946.7) / (1514.5 / 7430.4)
=0.21033008 / 0.20382483
=1.0319

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)
=((3403.4 + 1431.1) / 10569.4) / ((2933.8 + 1528.1) / 11766.5)
=0.45740534 / 0.37920367
=1.2062

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
=(210.2 - 1.3 - 874.6) / 10569.4
=-0.063

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 -2.97 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 0.82660.97091.0070.97811.22881.0090.96551.77760.60940.9604
GMI 0.99860.97080.96041.01981.0380.94970.98851.08050.86960.9449
AQI 1.0020.98121.05331.0161.01850.96320.99630.961.00871.0225
SGI 1.29341.02581.08551.02170.80321.12561.14051.27761.69370.9411
DEPI 0.81241.03310.97740.92350.84281.18010.93291.84910.60050.9351
SGAI 0.98471.07191.00921.06461.00660.92691.03781.44730.79621.0161
LVGI 0.9760.94421.08410.89450.89190.98411.34960.79761.04741.2276
TATA -0.021-0.0133-0.0316-0.0191-0.0349-0.0188-0.0628-0.0086-0.0341-0.0746
M-score -2.49-2.56-2.58-2.54-2.56-2.45-2.82-1.44-2.47-3.02

Pentair PLC Quarterly Data

Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14Dec14Mar15
DSRI 1.77761.36431.27690.47530.60950.7210.85910.90920.93920.9459
GMI 1.08051.10531.08061.0560.86940.83420.86110.88870.95580.9757
AQI 0.960.9810.97491.11011.00871.00861.00920.96021.02251.0184
SGI 1.27761.51281.78692.07131.69361.39361.16110.99970.96230.9349
DEPI 1.84911.46911.22870.31740.60050.79580.98181.31810.93510.8976
SGAI 1.44731.40851.36231.20920.79620.77660.79280.81731.01141.0319
LVGI 0.79760.80860.91751.18811.04741.09071.02511.1771.22761.2062
TATA -0.0086-0.0183-0.0226-0.0241-0.034-0.0259-0.0297-0.0666-0.0753-0.063
M-score -1.44-1.68-1.61-2.22-2.47-2.61-2.65-2.94-3.02-2.97
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