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TE Connectivity Ltd (NYSE:TEL)
Beneish M-Score
-2.31 (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 -2.31 suggests that the company is not a manipulator.

TEL' s Beneish M-Score Range Over the Past 10 Years
Min: -4.22   Max: -2.31
Current: -2.31

-4.22
-2.31

During the past 13 years, the highest Beneish M-Score of TE Connectivity Ltd was -2.31. The lowest was -4.22. And the median was -2.64.


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 * 1.1533+0.528 * 1.0225+0.404 * 1.1085+0.892 * 0.8675+0.115 * 1.0364
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9214+4.679 * 0.0169-0.327 * 1.0289
=-2.31

* 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 + 3466 + 3575 + 3580 = $13,703 Mil.
Gross Profit was 1051 + 1171 + 1198 + 1204 = $4,624 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 $621 Mil.
Selling, General & Admin. Expense(SGA) was $1,794 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 / 13703)
=0.17624295 / 0.15281325
=1.1533

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)
=(945 / 13703) / (962 / 11887)
=0.33744436 / 0.3300244
=1.0225

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 / 13703
=0.8675

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))
=(621 / (621 + 2878)) / (599 / (599 + 2899))
=0.17747928 / 0.17124071
=1.0364

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) / (1794 / 13703)
=0.12063599 / 0.13092024
=0.9214

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 -2.31 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 1.05040.89721.07550.97190.90531.04110.99161.00220.9885
GMI 1.02531.0081.02780.79021.01281.01430.93450.96651.0095
AQI 0.87791.130.9440.93731.0281.11050.97990.96671.0108
SGI 1.05061.10210.69141.17691.18570.9280.99981.04760.8793
DEPI 1.11170.92411.00890.92510.99950.9640.99040.9760.9462
SGAI 0.97350.91611.21220.92820.9761.021.05241.01330.9088
LVGI 1.18150.75131.00281.11641.0091.01350.97191.06440.9434
TATA -0.07820.0105-0.2797-0.0443-0.0317-0.0458-0.0318-0.01810.0273
M-score -2.83-2.29-4.04-2.73-2.53-2.68-2.68-2.58-2.43

TE Connectivity Ltd Quarterly Data

Dec13Mar14Jun14Sep14Dec14Mar15Jun15Sep15Dec15Mar16
DSRI 1.01571.0551.06411.00220.9860.86760.90780.95590.93491.1533
GMI 0.93380.92610.94960.96650.97950.99481.00081.00671.01161.0225
AQI 0.95390.94390.94190.96671.12741.01061.02091.01080.93981.1085
SGI 1.01711.02841.04221.04761.04311.00480.96170.90930.85520.8675
DEPI 1.01321.07431.0310.9760.93760.89410.9290.94621.00571.0364
SGAI 1.02981.03051.01261.01330.99150.96770.94660.92150.90980.9214
LVGI 1.02171.01160.94721.06441.0881.07331.1010.94340.97141.0289
TATA -0.0413-0.0369-0.0262-0.0181-0.00270.01260.00310.02730.01530.0169
M-score -2.71-2.64-2.54-2.58-2.46-2.57-2.61-2.44-2.59-2.31
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