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TE Connectivity Ltd (NYSE:TEL)
Beneish M-Score
-2.46 (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 -2.46 suggests that the company is not a manipulator.

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

-4.25
-2.46

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.


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 * 0.986+0.528 * 0.9795+0.404 * 1.1274+0.892 * 1.0431+0.115 * 0.9376
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9915+4.679 * -0.0027-0.327 * 1.088
=-2.46

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

This Year (Dec14) TTM:Last Year (Dec13) TTM:
Accounts Receivable was $2,349 Mil.
Revenue was 3466 + 3575 + 3580 + 3431 = $14,052 Mil.
Gross Profit was 1171 + 1198 + 1204 + 1173 = $4,746 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 $1,874 Mil.
Total Current Liabilities was $3,876 Mil.
Long-Term Debt was $3,286 Mil.
Net Income was 472 + 663 + 403 + 362 = $1,900 Mil.
Non Operating Income was -70 + 6 + 9 + 16 = $-39 Mil.
Cash Flow from Operations was 295 + 749 + 500 + 449 = $1,993 Mil.
Accounts Receivable was $2,284 Mil.
Revenue was 3326 + 3432 + 3449 + 3265 = $13,472 Mil.
Gross Profit was 1117 + 1156 + 1132 + 1052 = $4,457 Mil.
Total Current Assets was $6,358 Mil.
Total Assets was $18,443 Mil.
Property, Plant and Equipment(Net PPE) was $3,164 Mil.
Depreciation, Depletion and Amortization(DDA) was $604 Mil.
Selling, General & Admin. Expense(SGA) was $1,812 Mil.
Total Current Liabilities was $3,409 Mil.
Long-Term Debt was $2,615 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)
=(2349 / 14052) / (2284 / 13472)
=0.16716482 / 0.16953682
=0.986

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)
=(1198 / 13472) / (1171 / 14052)
=0.33083432 / 0.33774552
=0.9795

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 - (6045 + 3118) / 20153) / (1 - (6358 + 3164) / 18443)
=0.54532824 / 0.48370656
=1.1274

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
=14052 / 13472
=1.0431

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))
=(604 / (604 + 3164)) / (643 / (643 + 3118))
=0.16029724 / 0.17096517
=0.9376

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)
=(1874 / 14052) / (1812 / 13472)
=0.1333618 / 0.13450119
=0.9915

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)
=((3286 + 3876) / 20153) / ((2615 + 3409) / 18443)
=0.35538133 / 0.32662799
=1.088

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
=(1900 - -39 - 1993) / 20153
=-0.0027

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 -2.46 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

Sep05Sep06Sep07Sep08Sep09Sep10Sep11Sep12Sep13Sep14
DSRI 1.00840.9261.04210.97190.90781.03820.99161.0022
GMI 1.04770.88231.17420.79021.00951.01760.93450.9665
AQI 0.87791.130.93020.95120.98571.15810.97990.9667
SGI 1.09431.06780.71361.17691.14150.9640.99981.0476
DEPI 1.02670.95350.97780.92511.00830.95560.99040.976
SGAI 0.99780.88531.25440.92820.98431.01151.05241.0133
LVGI 1.18150.75131.01551.10251.01031.01210.97191.0644
TATA -0.03890.0105-0.2838-0.0443-0.0317-0.0458-0.0318-0.0181
M-score -2.65-2.35-4.01-2.72-2.59-2.63-2.68-2.58

TE Connectivity Ltd Quarterly Data

Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14Dec14
DSRI 1.04521.03091.00330.97590.99161.01571.0551.06411.00220.986
GMI 1.01790.98760.99090.95020.93450.93380.92610.94960.96650.9795
AQI 1.15811.1311.26281.00540.97990.95390.94390.94190.96671.1274
SGI 0.95750.9570.96440.96640.99981.01711.02841.04221.04761.0431
DEPI 0.95560.95910.90520.96250.99041.0161.07431.0310.9760.9376
SGAI 1.01081.04981.05081.07981.05241.02981.03051.01261.01330.9915
LVGI 1.01210.97090.92390.9770.97191.02171.01160.94721.06441.088
TATA -0.0458-0.0455-0.0401-0.0388-0.0318-0.0413-0.0369-0.0262-0.0181-0.0027
M-score -2.63-2.66-2.59-2.75-2.68-2.71-2.64-2.54-2.58-2.46
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