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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.
TE Connectivity Ltd has a M-score of -2.58 suggests that the company is not a manipulator.
During the past 13 years, the highest Beneish M-Score of TE Connectivity Ltd was -2.53. The lowest was -4.02. And the median was -2.68.
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 * 1.0022||+||0.528 * 0.9665||+||0.404 * 0.9667||+||0.892 * 1.0476||+||0.115 * 0.976|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0133||+||4.679 * -0.0181||-||0.327 * 1.0644|
|This Year (Sep14) TTM:||Last Year (Sep13) TTM:|
|Accounts Receivable was $2,439 Mil.|
Revenue was 3575 + 3580 + 3431 + 3326 = $13,912 Mil.
Gross Profit was 1198 + 1204 + 1173 + 1117 = $4,692 Mil.
Total Current Assets was $7,544 Mil.
Total Assets was $20,152 Mil.
Property, Plant and Equipment(Net PPE) was $3,126 Mil.
Depreciation, Depletion and Amortization(DDA) was $617 Mil.
Selling, General & Admin. Expense(SGA) was $1,882 Mil.
Total Current Liabilities was $3,954 Mil.
Long-Term Debt was $3,281 Mil.
Net Income was 663 + 403 + 362 + 353 = $1,781 Mil.
Non Operating Income was 6 + 9 + 16 + 32 = $63 Mil.
Cash Flow from Operations was 749 + 500 + 449 + 385 = $2,083 Mil.
|Accounts Receivable was $2,323 Mil.
Revenue was 3432 + 3449 + 3265 + 3134 = $13,280 Mil.
Gross Profit was 1156 + 1132 + 1052 + 989 = $4,329 Mil.
Total Current Assets was $6,309 Mil.
Total Assets was $18,461 Mil.
Property, Plant and Equipment(Net PPE) was $3,166 Mil.
Depreciation, Depletion and Amortization(DDA) was $607 Mil.
Selling, General & Admin. Expense(SGA) was $1,773 Mil.
Total Current Liabilities was $3,924 Mil.
Long-Term Debt was $2,303 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)|
|=||(2439 / 13912)||/||(2323 / 13280)|
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)|
|=||(1204 / 13280)||/||(1198 / 13912)|
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 - (7544 + 3126) / 20152)||/||(1 - (6309 + 3166) / 18461)|
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))|
|=||(607 / (607 + 3166))||/||(617 / (617 + 3126))|
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)|
|=||(1882 / 13912)||/||(1773 / 13280)|
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)|
|=||((3281 + 3954) / 20152)||/||((2303 + 3924) / 18461)|
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|
|=||(1781 - 63||-||2083)||/||20152|
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 -2.58 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