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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.
During the past 13 years, the highest Beneish M-Score of TE Connectivity Ltd was -2.07. The lowest was -4.25. And the median was -2.63.
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 * 1.0234||+||0.528 * 1.0235||+||0.404 * 1.146||+||0.892 * 0.965||+||0.115 * 1.0131|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9413||+||4.679 * 0.0784||-||0.327 * 1.1066|
|This Year (Jun16) TTM:||Last Year (Jun15) TTM:|
|Accounts Receivable was $2,158 Mil.|
Revenue was 3121 + 2952 + 2833 + 2984 = $11,890 Mil.
Gross Profit was 1022 + 962 + 945 + 968 = $3,897 Mil.
Total Current Assets was $4,929 Mil.
Total Assets was $17,500 Mil.
Property, Plant and Equipment(Net PPE) was $2,976 Mil.
Depreciation, Depletion and Amortization(DDA) was $599 Mil.
Selling, General & Admin. Expense(SGA) was $1,408 Mil.
Total Current Liabilities was $3,311 Mil.
Long-Term Debt was $3,734 Mil.
Net Income was 839 + 380 + 353 + 1040 = $2,612 Mil.
Non Operating Income was -651 + 12 + 8 + 9 = $-622 Mil.
Cash Flow from Operations was 718 + 154 + 366 + 624 = $1,862 Mil.
|Accounts Receivable was $2,185 Mil.
Revenue was 3118 + 3082 + 3049 + 3072 = $12,321 Mil.
Gross Profit was 1048 + 1051 + 1020 + 1014 = $4,133 Mil.
Total Current Assets was $7,736 Mil.
Total Assets was $20,441 Mil.
Property, Plant and Equipment(Net PPE) was $2,925 Mil.
Depreciation, Depletion and Amortization(DDA) was $598 Mil.
Selling, General & Admin. Expense(SGA) was $1,550 Mil.
Total Current Liabilities was $4,041 Mil.
Long-Term Debt was $3,395 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)|
|=||(2158 / 11890)||/||(2185 / 12321)|
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)|
|=||(4133 / 12321)||/||(3897 / 11890)|
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 - (4929 + 2976) / 17500)||/||(1 - (7736 + 2925) / 20441)|
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))|
|=||(598 / (598 + 2925))||/||(599 / (599 + 2976))|
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)|
|=||(1408 / 11890)||/||(1550 / 12321)|
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)|
|=||((3734 + 3311) / 17500)||/||((3395 + 4041) / 20441)|
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|
|=||(2612 - -622||-||1862)||/||17500|
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 -2.07 signals that the company is likely to 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