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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.
TE Connectivity Ltd has a M-score of -2.54 suggests that the company is not a manipulator.
During the past 12 years, the highest Beneish M-Score of TE Connectivity Ltd was -2.46. The lowest was -4.25. And the median was -2.66.
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 TE Connectivity Ltd 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 * 1.0641||+||0.528 * 0.9496||+||0.404 * 0.9419||+||0.892 * 1.0422||+||0.115 * 1.031|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0126||+||4.679 * -0.0262||-||0.327 * 0.9472|
|This Year (Jun14) TTM:||Last Year (Jun13) TTM:|
|Accounts Receivable was $2,503 Mil.|
Revenue was 3580 + 3431 + 3326 + 3432 = $13,769 Mil.
Gross Profit was 1204 + 1173 + 1117 + 1156 = $4,650 Mil.
Total Current Assets was $6,873 Mil.
Total Assets was $18,871 Mil.
Property, Plant and Equipment(Net PPE) was $3,154 Mil.
Depreciation, Depletion and Amortization(DDA) was $607 Mil.
Selling, General & Admin. Expense(SGA) was $1,872 Mil.
Total Current Liabilities was $3,860 Mil.
Long-Term Debt was $2,375 Mil.
Net Income was 403 + 362 + 353 + 387 = $1,505 Mil.
Non Operating Income was 9 + 16 + 32 + 16 = $73 Mil.
Cash Flow from Operations was 500 + 449 + 385 + 593 = $1,927 Mil.
|Accounts Receivable was $2,257 Mil.
Revenue was 3449 + 3265 + 3134 + 3364 = $13,212 Mil.
Gross Profit was 1132 + 1052 + 989 + 1064 = $4,237 Mil.
Total Current Assets was $6,018 Mil.
Total Assets was $18,090 Mil.
Property, Plant and Equipment(Net PPE) was $3,071 Mil.
Depreciation, Depletion and Amortization(DDA) was $613 Mil.
Selling, General & Admin. Expense(SGA) was $1,774 Mil.
Total Current Liabilities was $4,003 Mil.
Long-Term Debt was $2,307 Mil.
1. DSRI = Days Sales in Receivables Index
A large increase in DSR could be indicative of revenue inflation.
|DSRI||=||(Receivables_t / Revenue_t)||/||(Receivables_t-1 / Revenue_t-1)|
|=||(2503 / 13769)||/||(2257 / 13212)|
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.
|=||(GrossProfit_t-1 / Revenue_t-1)||/||(GrossProfit_t / Revenue_t)|
|=||(1173 / 13212)||/||(1204 / 13769)|
3. AQI = Asset Quality Index
AQI is the ratio of asset quality in year t to year t-1.
|AQI||=||(1 - (CurrentAssets_t + PPE_t) / TotalAssets_t)||/||(1 - (CurrentAssets_t-1 + PPE_t-1) / TotalAssets_t-1)|
|=||(1 - (6873 + 3154) / 18871)||/||(1 - (6018 + 3071) / 18090)|
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.
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))|
|=||(613 / (613 + 3071))||/||(607 / (607 + 3154))|
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)|
|=||(1872 / 13769)||/||(1774 / 13212)|
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)|
|=||((2375 + 3860) / 18871)||/||((2307 + 4003) / 18090)|
8. TATA = Total Accruals to Total Assets
Total accruals calculated as the change in working capital accounts other than cash less depreciation.
|=||(NetIncome_t - NonOperatingIncome_t||-||CashFlowsfromOperations_t)||/||TotalAssets_t|
|=||(1505 - 73||-||1927)||/||18871|
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.
TE Connectivity Ltd has a M-score of -2.54 suggests that the company will not be a manipulator.
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
TE Connectivity Ltd Annual Data
TE Connectivity Ltd Quarterly Data