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TE Connectivity Ltd (NYSE:TEL)
Beneish M-Score
-2.60 (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 -2.60 suggests that the company is not a manipulator.

TEL' s Beneish M-Score Range Over the Past 10 Years
Min: -4.22   Max: -2.32
Current: -2.6

-4.22
-2.32

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.


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 * 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
=-2.60

* 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

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)
=(1878 / 12017) / (2349 / 13549)
=0.15627861 / 0.17337073
=0.9014

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)
=(968 / 13549) / (945 / 12017)
=0.33670382 / 0.33386036
=1.0085

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 - (6505 + 2866) / 19223) / (1 - (6045 + 3118) / 20153)
=0.51251105 / 0.54532824
=0.9398

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
=12017 / 13549
=0.8869

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))
=0.17096517 / 0.1699971
=1.0057

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)
=0.12132812 / 0.13233449
=0.9168

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)
=0.34521147 / 0.35538133
=0.9714

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
=(2301 - 23 - 1984) / 19223
=0.0153

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.


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

Sep06Sep07Sep08Sep09Sep10Sep11Sep12Sep13Sep14Sep15
DSRI 1.00840.9261.04210.97190.90531.04110.99161.00220.9885
GMI 1.04770.88231.17420.79021.01281.01430.93450.96651.0095
AQI 0.87791.130.9440.93731.0281.11050.97990.96671.0108
SGI 1.09431.06780.71361.17691.18570.9280.99981.04760.8793
DEPI 1.02670.95350.97780.92510.99950.9640.99040.9760.9462
SGAI 0.99780.88531.25440.92820.9761.021.05241.01330.9088
LVGI 1.18150.75131.00281.11641.0091.01350.97191.06440.9434
TATA -0.03890.0105-0.2797-0.0443-0.0317-0.0458-0.0318-0.01810.0273
M-score -2.65-2.35-3.98-2.73-2.53-2.68-2.68-2.58-2.43

TE Connectivity Ltd Quarterly Data

Sep13Dec13Mar14Jun14Sep14Dec14Mar15Jun15Sep15Dec15
DSRI 1.0021.01571.0551.06411.03981.02260.90070.94360.92140.9014
GMI 0.9340.93380.92610.94960.96960.98260.9981.00421.00351.0085
AQI 0.97990.95390.94390.94190.96671.12741.01061.02091.01080.9398
SGI 0.98951.01711.02841.04221.00971.00570.96790.92510.94340.8869
DEPI 0.99041.01321.07431.0310.9760.93760.89410.9290.94621.0057
SGAI 1.0541.02981.03051.01261.0060.98390.95930.93720.92820.9168
LVGI 0.97191.02171.01160.94721.06441.0881.07331.1010.94340.9714
TATA -0.0318-0.0413-0.0369-0.0262-0.0181-0.00270.01260.00310.02730.0153
M-score -2.68-2.71-2.64-2.54-2.57-2.46-2.57-2.60-2.44-2.60
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