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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 -2.32. The lowest was -4.22. And the median was -2.65.
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 * 0.9014||+||0.528 * 1.0085||+||0.404 * 0.9398||+||0.892 * 0.8869||+||0.115 * 1.0057|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9168||+||4.679 * 0.0153||-||0.327 * 0.9714|
* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.
|This Year (Dec15) TTM:||Last Year (Dec14) TTM:|
|Accounts Receivable was $1,878 Mil.|
Revenue was 2833 + 2984 + 3118 + 3082 = $12,017 Mil.
Gross Profit was 945 + 968 + 1048 + 1051 = $4,012 Mil.
Total Current Assets was $6,505 Mil.
Total Assets was $19,223 Mil.
Property, Plant and Equipment(Net PPE) was $2,866 Mil.
Depreciation, Depletion and Amortization(DDA) was $587 Mil.
Selling, General & Admin. Expense(SGA) was $1,458 Mil.
Total Current Liabilities was $3,266 Mil.
Long-Term Debt was $3,370 Mil.
Net Income was 353 + 1040 + 309 + 599 = $2,301 Mil.
Non Operating Income was 8 + 9 + 11 + -5 = $23 Mil.
Cash Flow from Operations was 366 + 624 + 596 + 398 = $1,984 Mil.
|Accounts Receivable was $2,349 Mil.
Revenue was 3466 + 3072 + 3580 + 3431 = $13,549 Mil.
Gross Profit was 1171 + 1014 + 1204 + 1173 = $4,562 Mil.
Total Current Assets was $6,045 Mil.
Total Assets was $20,153 Mil.
Property, Plant and Equipment(Net PPE) was $3,118 Mil.
Depreciation, Depletion and Amortization(DDA) was $643 Mil.
Selling, General & Admin. Expense(SGA) was $1,793 Mil.
Total Current Liabilities was $3,876 Mil.
Long-Term Debt was $3,286 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)|
|=||(1878 / 12017)||/||(2349 / 13549)|
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)|
|=||(968 / 13549)||/||(945 / 12017)|
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 - (6505 + 2866) / 19223)||/||(1 - (6045 + 3118) / 20153)|
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))|
|=||(643 / (643 + 3118))||/||(587 / (587 + 2866))|
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)|
|=||(1458 / 12017)||/||(1793 / 13549)|
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)|
|=||((3370 + 3266) / 19223)||/||((3286 + 3876) / 20153)|
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|
|=||(2301 - 23||-||1984)||/||19223|
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 -2.60 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