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Westinghouse Air Brake Technologies Corp (NYSE:WAB)
Beneish M-Score
-2.48 (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.

Westinghouse Air Brake Technologies Corp has a M-score of -2.48 suggests that the company is not a manipulator.

WAB' s 10-Year Beneish M-Score Range
Min: -3.13   Max: -0.96
Current: -2.48

-3.13
-0.96

During the past 13 years, the highest Beneish M-Score of Westinghouse Air Brake Technologies Corp was -0.96. The lowest was -3.13. And the median was -2.41.


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 Westinghouse Air Brake Technologies Corp 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 * 0.9067+0.528 * 0.9621+0.404 * 1.0092+0.892 * 1.1988+0.115 * 0.8831
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0674+4.679 * -0.0177-0.327 * 0.9029
=-2.48

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

This Year (Jun15) TTM:Last Year (Jun14) TTM:
Accounts Receivable was $506 Mil.
Revenue was 847.028 + 818.594 + 820.866 + 797.271 = $3,284 Mil.
Gross Profit was 267.764 + 255.355 + 254.297 + 247.458 = $1,025 Mil.
Total Current Assets was $1,580 Mil.
Total Assets was $3,298 Mil.
Property, Plant and Equipment(Net PPE) was $357 Mil.
Depreciation, Depletion and Amortization(DDA) was $65 Mil.
Selling, General & Admin. Expense(SGA) was $355 Mil.
Total Current Liabilities was $700 Mil.
Long-Term Debt was $400 Mil.
Net Income was 101.504 + 96.164 + 92.686 + 90.155 = $381 Mil.
Non Operating Income was -1.887 + -2.866 + -1.752 + -0.154 = $-7 Mil.
Cash Flow from Operations was 67.265 + 43.661 + 242.221 + 92.505 = $446 Mil.
Accounts Receivable was $465 Mil.
Revenue was 731.068 + 695.249 + 681.482 + 631.398 = $2,739 Mil.
Gross Profit was 224.658 + 209.569 + 200.125 + 188.133 = $822 Mil.
Total Current Assets was $1,527 Mil.
Total Assets was $3,164 Mil.
Property, Plant and Equipment(Net PPE) was $343 Mil.
Depreciation, Depletion and Amortization(DDA) was $54 Mil.
Selling, General & Admin. Expense(SGA) was $278 Mil.
Total Current Liabilities was $668 Mil.
Long-Term Debt was $500 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)
=(505.539 / 3283.759) / (465.092 / 2739.197)
=0.15395131 / 0.16979137
=0.9067

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)
=(255.355 / 2739.197) / (267.764 / 3283.759)
=0.300265 / 0.3121039
=0.9621

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 - (1579.966 + 356.97) / 3298.123) / (1 - (1526.851 + 343.154) / 3163.868)
=0.41271566 / 0.40894974
=1.0092

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
=3283.759 / 2739.197
=1.1988

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))
=(54.036 / (54.036 + 343.154)) / (65.011 / (65.011 + 356.97))
=0.13604572 / 0.15406144
=0.8831

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)
=(355.239 / 3283.759) / (277.607 / 2739.197)
=0.10818059 / 0.10134612
=1.0674

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)
=((400.348 + 699.527) / 3298.123) / ((500.219 + 668.416) / 3163.868)
=0.33348514 / 0.36936908
=0.9029

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
=(380.509 - -6.659 - 445.652) / 3298.123
=-0.0177

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.

Westinghouse Air Brake Technologies Corp has a M-score of -2.48 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.

Westinghouse Air Brake Technologies Corp Annual Data

Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14
DSRI 1.17610.81491.00211.06320.85531.15291.02740.92660.8351.0697
GMI 0.9940.92021.00411.00180.96670.94171.02790.9980.97570.9683
AQI 0.80661.10851.0541.42241.14911.00650.92581.05710.99620.9344
SGI 1.25791.05181.25051.15780.89011.07521.30571.21521.07331.1863
DEPI 1.07581.0810.92071.09610.83920.94990.93791.09750.97891.0223
SGAI 0.83860.8020.9110.99261.06031.13160.96780.81680.99621.0413
LVGI 1.00890.86480.94971.28520.8480.96691.07160.85320.98521.0445
TATA -0.0305-0.0666-0.0253-0.0193-0.0298-0.0294-0.03620.00640.0204-0.036
M-score -2.28-2.83-2.33-2.28-2.79-2.46-2.39-2.21-2.48-2.48

Westinghouse Air Brake Technologies Corp Quarterly Data

Mar13Jun13Sep13Dec13Mar14Jun14Sep14Dec14Mar15Jun15
DSRI 0.9441.00341.22990.8351.34720.85220.71531.06970.65040.9067
GMI 0.99060.96440.95760.97570.97780.98840.98280.96830.96420.9621
AQI 1.10081.04591.14950.99620.9490.94810.88830.93441.00141.0092
SGI 1.15631.1011.07771.07331.09191.11741.16421.18631.19711.1988
DEPI 1.04820.96740.99850.97890.95681.24131.06871.02231.06770.8831
SGAI 0.84180.95640.98280.99620.99160.98321.01381.04131.05541.0674
LVGI 0.94050.85930.87280.98520.90551.0091.04451.04450.99670.9029
TATA -0.00210.00830.02470.02040.0251-0.0034-0.0151-0.036-0.0371-0.0177
M-score -2.31-2.30-2.00-2.48-1.97-2.53-2.73-2.48-2.82-2.48
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