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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 -2.71 suggests that the company is not a manipulator.
During the past 12 years, the highest Beneish M-Score of TE Connectivity Ltd was -2.46. The lowest was -4.25. And the median was -2.70.
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 * 1.0157||+||0.528 * 0.9338||+||0.404 * 0.9539||+||0.892 * 1.0171||+||0.115 * 1.016|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0298||+||4.679 * -0.0413||-||0.327 * 1.0217|
|This Year (Dec13) TTM:||Last Year (Dec12) TTM:|
|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.
Net Income was 353 + 387 + 335 + 277 = $1,352 Mil.
Non Operating Income was 32 + 16 + 18 + 9 = $75 Mil.
Cash Flow from Operations was 385 + 593 + 616 + 445 = $2,039 Mil.
|Accounts Receivable was $2,211 Mil.
Revenue was 3134 + 3364 + 3499 + 3249 = $13,246 Mil.
Gross Profit was 989 + 1064 + 1018 + 1021 = $4,092 Mil.
Total Current Assets was $5,753 Mil.
Total Assets was $18,136 Mil.
Property, Plant and Equipment(Net PPE) was $3,187 Mil.
Depreciation, Depletion and Amortization(DDA) was $620 Mil.
Selling, General & Admin. Expense(SGA) was $1,730 Mil.
Total Current Liabilities was $3,111 Mil.
Long-Term Debt was $2,687 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)|
|=||(2284 / 13472)||/||(2211 / 13246)|
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)|
|=||(1156 / 13246)||/||(1117 / 13472)|
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 - (6358 + 3164) / 18443)||/||(1 - (5753 + 3187) / 18136)|
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))|
|=||(620 / (620 + 3187))||/||(604 / (604 + 3164))|
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)|
|=||(1812 / 13472)||/||(1730 / 13246)|
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)|
|=||((2615 + 3409) / 18443)||/||((2687 + 3111) / 18136)|
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|
|=||(1352 - 75||-||2039)||/||18443|
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 -2.71 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