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TE Connectivity Ltd (NYSE:TEL)
Beneish M-Score
-2.64 (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.

TE Connectivity Ltd has a M-score of -2.64 suggests that the company is not a manipulator.

TEL' s 10-Year Beneish M-Score Range
Min: -4.25   Max: -2.46
Current: -2.64

-4.25
-2.46

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 -2.68.


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 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 * 1.055+0.528 * 0.9261+0.404 * 0.9439+0.892 * 1.0284+0.115 * 1.0743
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0305+4.679 * -0.0369-0.327 * 1.0116
=-2.64

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

This Year (Mar14) TTM:Last Year (Mar13) TTM:
Accounts Receivable was $2,402 Mil.
Revenue was 3431 + 3326 + 3432 + 3449 = $13,638 Mil.
Gross Profit was 1173 + 1117 + 1156 + 1132 = $4,578 Mil.
Total Current Assets was $6,566 Mil.
Total Assets was $18,628 Mil.
Property, Plant and Equipment(Net PPE) was $3,181 Mil.
Depreciation, Depletion and Amortization(DDA) was $600 Mil.
Selling, General & Admin. Expense(SGA) was $1,845 Mil.
Total Current Liabilities was $4,087 Mil.
Long-Term Debt was $2,370 Mil.
Net Income was 362 + 353 + 387 + 335 = $1,437 Mil.
Non Operating Income was 16 + 32 + 16 + 18 = $82 Mil.
Cash Flow from Operations was 449 + 385 + 593 + 616 = $2,043 Mil.
Accounts Receivable was $2,214 Mil.
Revenue was 3265 + 3134 + 3364 + 3499 = $13,262 Mil.
Gross Profit was 1052 + 989 + 1064 + 1018 = $4,123 Mil.
Total Current Assets was $5,864 Mil.
Total Assets was $18,140 Mil.
Property, Plant and Equipment(Net PPE) was $3,114 Mil.
Depreciation, Depletion and Amortization(DDA) was $640 Mil.
Selling, General & Admin. Expense(SGA) was $1,741 Mil.
Total Current Liabilities was $3,901 Mil.
Long-Term Debt was $2,315 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)
=(2402 / 13638) / (2214 / 13262)
=0.17612553 / 0.16694315
=1.055

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)
=(1117 / 13262) / (1173 / 13638)
=0.31088825 / 0.33567972
=0.9261

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 - (6566 + 3181) / 18628) / (1 - (5864 + 3114) / 18140)
=0.47675542 / 0.50507166
=0.9439

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
=13638 / 13262
=1.0284

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))
=(640 / (640 + 3114)) / (600 / (600 + 3181))
=0.17048482 / 0.15868818
=1.0743

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)
=(1845 / 13638) / (1741 / 13262)
=0.13528377 / 0.13127733
=1.0305

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)
=((2370 + 4087) / 18628) / ((2315 + 3901) / 18140)
=0.34662873 / 0.34266814
=1.0116

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
=(1437 - 82 - 2043) / 18628
=-0.0369

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 -2.64 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.

TE Connectivity Ltd Annual Data

Sep04Sep05Sep06Sep07Sep08Sep09Sep10Sep11Sep12Sep13
DSRI 1.00840.9261.04210.97190.90781.03820.9916
GMI 1.04770.88231.17420.79021.00951.01760.9345
AQI 0.87791.130.93020.95120.98571.15810.9799
SGI 1.09431.06780.71361.17691.14150.9640.9998
DEPI 1.02670.95350.97780.92511.00830.95560.9904
SGAI 0.99780.88531.25440.92820.98431.01151.0524
LVGI 1.18150.75131.01551.10251.01031.01210.9719
TATA -0.03890.0105-0.2838-0.0443-0.0317-0.0458-0.0318
M-score -2.65-2.35-4.01-2.72-2.59-2.63-2.68

TE Connectivity Ltd Quarterly Data

Dec11Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14
DSRI 0.82780.85090.88761.04521.03091.00330.97590.99161.01571.055
GMI 1.04781.01941.01751.01790.98760.99090.95020.93450.93380.9261
AQI 0.9850.8811.1121.15811.1311.26281.00540.97990.95390.9439
SGI 1.11821.07771.03140.95750.9570.96440.96640.99981.01711.0284
DEPI 0.91840.93860.92030.95560.95910.90520.96250.99041.0161.0743
SGAI 0.97960.99820.99111.01081.04981.05081.07981.05241.02981.0305
LVGI 0.9281.06291.01471.01210.97090.92390.9770.97191.02171.0116
TATA -0.0347-0.0326-0.0458-0.0458-0.0455-0.0401-0.0388-0.0318-0.0413-0.0369
M-score -2.66-2.77-2.73-2.63-2.66-2.59-2.75-2.68-2.71-2.64
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