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TE Connectivity Ltd (NYSE:TEL)
Beneish M-Score
-2.35 (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 -2.35 suggests that the company is not a manipulator.

TEL' s Beneish M-Score Range Over the Past 10 Years
Min: -4.25   Max: -2.25
Current: -2.35

-4.25
-2.25

During the past 13 years, the highest Beneish M-Score of TE Connectivity Ltd was -2.25. The lowest was -4.25. And the median was -2.63.


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 * 1.0334+0.528 * 1.0126+0.404 * 1.1085+0.892 * 0.9682+0.115 * 0.9907
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9537+4.679 * 0.0169-0.327 * 1.0289
=-2.35

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

This Year (Mar16) TTM:Last Year (Mar15) TTM:
Accounts Receivable was $2,095 Mil.
Revenue was 2952 + 2833 + 2984 + 3118 = $11,887 Mil.
Gross Profit was 962 + 945 + 968 + 1048 = $3,923 Mil.
Total Current Assets was $5,414 Mil.
Total Assets was $17,841 Mil.
Property, Plant and Equipment(Net PPE) was $2,899 Mil.
Depreciation, Depletion and Amortization(DDA) was $599 Mil.
Selling, General & Admin. Expense(SGA) was $1,434 Mil.
Total Current Liabilities was $3,097 Mil.
Long-Term Debt was $3,732 Mil.
Net Income was 380 + 353 + 1040 + 309 = $2,082 Mil.
Non Operating Income was 12 + 8 + 9 + 11 = $40 Mil.
Cash Flow from Operations was 154 + 366 + 624 + 596 = $1,740 Mil.
Accounts Receivable was $2,094 Mil.
Revenue was 3082 + 3049 + 3072 + 3075 = $12,278 Mil.
Gross Profit was 1051 + 1020 + 1014 + 1018 = $4,103 Mil.
Total Current Assets was $7,612 Mil.
Total Assets was $20,243 Mil.
Property, Plant and Equipment(Net PPE) was $2,878 Mil.
Depreciation, Depletion and Amortization(DDA) was $588 Mil.
Selling, General & Admin. Expense(SGA) was $1,553 Mil.
Total Current Liabilities was $4,141 Mil.
Long-Term Debt was $3,390 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)
=(2095 / 11887) / (2094 / 12278)
=0.17624295 / 0.17054895
=1.0334

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)
=(4103 / 12278) / (3923 / 11887)
=0.33417495 / 0.3300244
=1.0126

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 - (5414 + 2899) / 17841) / (1 - (7612 + 2878) / 20243)
=0.53405078 / 0.48179618
=1.1085

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
=11887 / 12278
=0.9682

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))
=(588 / (588 + 2878)) / (599 / (599 + 2899))
=0.16964801 / 0.17124071
=0.9907

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)
=(1434 / 11887) / (1553 / 12278)
=0.12063599 / 0.1264864
=0.9537

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)
=((3732 + 3097) / 17841) / ((3390 + 4141) / 20243)
=0.38277002 / 0.37202984
=1.0289

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
=(2082 - 40 - 1740) / 17841
=0.0169

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 -2.35 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 1.05040.89721.07550.97190.8741.07850.99160.84531.1721
GMI 1.02531.0081.02780.79021.01281.01430.93450.96651.0095
AQI 0.87791.130.93020.95120.98571.15810.97990.85161.1474
SGI 1.05061.10210.69141.17691.18570.9280.99981.04760.8793
DEPI 1.11170.92411.00890.92510.99340.96990.99040.92231.0013
SGAI 0.97350.91611.21220.92820.9761.021.05241.01330.9088
LVGI 1.18150.75131.01551.10251.01031.01210.97191.07010.9383
TATA -0.07820.0105-0.2832-0.0443-0.0317-0.0458-0.0318-0.01810.0273
M-score -2.83-2.29-4.06-2.72-2.58-2.63-2.68-2.78-2.20

TE Connectivity Ltd Quarterly Data

Dec13Mar14Jun14Sep14Dec14Mar15Jun15Sep15Dec15Mar16
DSRI 1.18141.27541.34340.81090.97960.8010.77281.04780.8091.0334
GMI 0.94680.94230.96950.9620.98040.98730.98610.99730.99691.0126
AQI 0.95390.94390.94190.85161.12741.01061.02091.14740.93981.1085
SGI 0.87440.85060.82551.09191.04991.08841.12960.98360.98820.9682
DEPI 1.12961.26391.2440.91210.9440.79510.7880.91120.87980.9907
SGAI 0.97770.95890.92861.03160.99241.00491.00890.94270.95740.9537
LVGI 1.02171.01160.94721.07011.0881.07331.1010.93830.97141.0289
TATA -0.0413-0.0369-0.0262-0.0181-0.00270.01260.00310.02730.01530.0169
M-score -2.65-2.55-2.42-2.78-2.46-2.58-2.62-2.24-2.62-2.35
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