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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 -2.46. 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 * 0.7611||+||0.528 * 0.9823||+||0.404 * 1.0209||+||0.892 * 1.1469||+||0.115 * 0.8125|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0151||+||4.679 * 0.0031||-||0.327 * 1.101|
* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.
|This Year (Jun15) TTM:||Last Year (Jun14) TTM:|
|Accounts Receivable was $2,185 Mil.|
Revenue was 3118 + 3082 + 3466 + 5011 = $14,677 Mil.
Gross Profit was 1048 + 1051 + 1171 + 1734 = $5,004 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 $664 Mil.
Selling, General & Admin. Expense(SGA) was $1,971 Mil.
Total Current Liabilities was $4,041 Mil.
Long-Term Debt was $3,395 Mil.
Net Income was 309 + 599 + 472 + 663 = $2,043 Mil.
Non Operating Income was 11 + -5 + -70 + 6 = $-58 Mil.
Cash Flow from Operations was 596 + 398 + 295 + 749 = $2,038 Mil.
|Accounts Receivable was $2,503 Mil.
Revenue was 3075 + 2964 + 3326 + 3432 = $12,797 Mil.
Gross Profit was 1018 + 995 + 1117 + 1156 = $4,286 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 $558 Mil.
Selling, General & Admin. Expense(SGA) was $1,693 Mil.
Total Current Liabilities was $3,860 Mil.
Long-Term Debt was $2,375 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)|
|=||(2185 / 14677)||/||(2503 / 12797)|
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)|
|=||(1051 / 12797)||/||(1048 / 14677)|
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 - (7736 + 2925) / 20441)||/||(1 - (6873 + 3154) / 18871)|
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))|
|=||(558 / (558 + 3154))||/||(664 / (664 + 2925))|
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)|
|=||(1971 / 14677)||/||(1693 / 12797)|
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)|
|=||((3395 + 4041) / 20441)||/||((2375 + 3860) / 18871)|
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|
|=||(2043 - -58||-||2038)||/||20441|
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 -2.61 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