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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: -3.05   Max: -1.46
Current: -2.48

-3.05
-1.46

During the past 13 years, the highest Beneish M-Score of Westinghouse Air Brake Technologies Corp was -1.46. The lowest was -3.05. And the median was -2.46.


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 * 1.0697+0.528 * 0.9683+0.404 * 0.9344+0.892 * 1.1863+0.115 * 1.0223
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0413+4.679 * -0.036-0.327 * 1.0445
=-2.48

* 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 $443 Mil.
Revenue was 820.866 + 797.271 + 731.068 + 695.249 = $3,044 Mil.
Gross Profit was 254.297 + 247.458 + 224.658 + 209.569 = $936 Mil.
Total Current Assets was $1,638 Mil.
Total Assets was $3,304 Mil.
Property, Plant and Equipment(Net PPE) was $339 Mil.
Depreciation, Depletion and Amortization(DDA) was $61 Mil.
Selling, General & Admin. Expense(SGA) was $325 Mil.
Total Current Liabilities was $739 Mil.
Long-Term Debt was $520 Mil.
Net Income was 92.686 + 90.155 + 88.705 + 80.134 = $352 Mil.
Non Operating Income was -1.752 + -0.154 + 0.243 + -0.017 = $-2 Mil.
Cash Flow from Operations was 242.221 + 92.505 + 111.444 + 26.215 = $472 Mil.
Accounts Receivable was $349 Mil.
Revenue was 681.482 + 631.398 + 638.002 + 615.51 = $2,566 Mil.
Gross Profit was 200.125 + 188.133 + 192.881 + 182.888 = $764 Mil.
Total Current Assets was $1,333 Mil.
Total Assets was $2,822 Mil.
Property, Plant and Equipment(Net PPE) was $276 Mil.
Depreciation, Depletion and Amortization(DDA) was $51 Mil.
Selling, General & Admin. Expense(SGA) was $263 Mil.
Total Current Liabilities was $579 Mil.
Long-Term Debt was $450 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)
=(443.464 / 3044.454) / (349.458 / 2566.392)
=0.1456629 / 0.13616704
=1.0697

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)
=(247.458 / 2566.392) / (254.297 / 3044.454)
=0.29770472 / 0.30743838
=0.9683

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 - (1637.864 + 339.111) / 3303.841) / (1 - (1333.047 + 276.078) / 2821.997)
=0.40161315 / 0.42979209
=0.9344

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
=3044.454 / 2566.392
=1.1863

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))
=(51.193 / (51.193 + 276.078)) / (61.261 / (61.261 + 339.111))
=0.15642388 / 0.1530102
=1.0223

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)
=(324.539 / 3044.454) / (262.718 / 2566.392)
=0.10660007 / 0.10236862
=1.0413

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)
=((520.403 + 738.802) / 3303.841) / ((450.288 + 579.4) / 2821.997)
=0.38113366 / 0.3648792
=1.0445

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
=(351.68 - -1.68 - 472.385) / 3303.841
=-0.036

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

Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14Dec14
DSRI 0.97950.92660.9441.00341.22990.8351.34720.85220.71531.0697
GMI 1.03720.9980.99060.96440.95760.97570.97780.98840.98280.9683
AQI 0.97321.05711.10081.04591.14950.99620.9490.94810.88830.9344
SGI 1.26781.21521.15631.1011.07771.07331.09191.11741.16421.1863
DEPI 1.13251.09751.04820.96740.99850.97890.95681.24131.06871.0223
SGAI 0.79590.81680.84180.95640.98280.99620.99160.98321.01381.0413
LVGI 0.99420.85320.94050.85930.87280.98520.90551.0091.04451.0445
TATA -0.0120.0064-0.00210.00830.02470.02040.0251-0.0034-0.0151-0.036
M-score -2.26-2.21-2.31-2.30-2.00-2.48-1.97-2.53-2.73-2.48
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