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Westinghouse Air Brake Technologies Corp (NYSE:WAB)
Beneish M-Score
-2.74 (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 -2.74 suggests that the company is not a manipulator.

WAB' s Beneish M-Score Range Over the Past 10 Years
Min: -3.42   Max: -1.02
Current: -2.74

-3.42
-1.02

During the past 13 years, the highest Beneish M-Score of Westinghouse Air Brake Technologies Corp was -1.02. The lowest was -3.42. And the median was -2.42.


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 * 0.932+0.528 * 0.9648+0.404 * 0.9553+0.892 * 1.0296+0.115 * 0.9836
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0089+4.679 * -0.024-0.327 * 1.2251
=-2.74

* 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 $476 Mil.
Revenue was 772.031 + 832.849 + 809.527 + 847.028 = $3,261 Mil.
Gross Profit was 255.18 + 267.628 + 257.069 + 267.764 = $1,048 Mil.
Total Current Assets was $1,687 Mil.
Total Assets was $3,381 Mil.
Property, Plant and Equipment(Net PPE) was $354 Mil.
Depreciation, Depletion and Amortization(DDA) was $65 Mil.
Selling, General & Admin. Expense(SGA) was $352 Mil.
Total Current Liabilities was $658 Mil.
Long-Term Debt was $802 Mil.
Net Income was 94.163 + 101.779 + 99.181 + 101.504 = $397 Mil.
Non Operating Income was 0.154 + 2.379 + -2.937 + -1.887 = $-2 Mil.
Cash Flow from Operations was 75.566 + 192.954 + 144.38 + 67.265 = $480 Mil.
Accounts Receivable was $496 Mil.
Revenue was 818.594 + 820.866 + 797.271 + 731.068 = $3,168 Mil.
Gross Profit was 255.355 + 254.297 + 247.458 + 224.658 = $982 Mil.
Total Current Assets was $1,504 Mil.
Total Assets was $3,168 Mil.
Property, Plant and Equipment(Net PPE) was $349 Mil.
Depreciation, Depletion and Amortization(DDA) was $63 Mil.
Selling, General & Admin. Expense(SGA) was $339 Mil.
Total Current Liabilities was $696 Mil.
Long-Term Debt was $420 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)
=(475.659 / 3261.435) / (495.712 / 3167.799)
=0.14584347 / 0.15648468
=0.932

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)
=(267.628 / 3167.799) / (255.18 / 3261.435)
=0.30992118 / 0.32122087
=0.9648

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 - (1686.565 + 353.873) / 3380.785) / (1 - (1503.933 + 349.043) / 3167.507)
=0.39646029 / 0.41500492
=0.9553

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
=3261.435 / 3167.799
=1.0296

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))
=(63.252 / (63.252 + 349.043)) / (65.397 / (65.397 + 353.873))
=0.15341442 / 0.15597825
=0.9836

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)
=(352.353 / 3261.435) / (339.229 / 3167.799)
=0.10803619 / 0.10708666
=1.0089

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)
=((801.883 + 657.668) / 3380.785) / ((420.406 + 695.769) / 3167.507)
=0.43171956 / 0.3523828
=1.2251

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
=(396.627 - -2.291 - 480.165) / 3380.785
=-0.024

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 -2.74 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

Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15
DSRI 0.81491.00211.06320.85531.15291.02740.92660.8351.06971.0272
GMI 0.92021.00411.00180.96670.94171.02790.9980.97570.96830.9706
AQI 1.10851.0541.42241.14911.00650.92581.05710.99620.93441.007
SGI 1.05181.25051.15780.89011.07521.30571.21521.07331.18631.0866
DEPI 1.0810.92071.09610.83920.94990.93791.09750.97891.02230.9878
SGAI 0.8020.9110.99261.06031.13160.96780.81680.99621.04130.9851
LVGI 0.86480.94971.28520.8480.96691.07160.85320.98521.04451.0812
TATA -0.0666-0.0253-0.0193-0.0287-0.0294-0.03620.00640.0204-0.036-0.0134
M-score -2.83-2.33-2.28-2.78-2.46-2.39-2.21-2.48-2.48-2.48

Westinghouse Air Brake Technologies Corp Quarterly Data

Dec13Mar14Jun14Sep14Dec14Mar15Jun15Sep15Dec15Mar16
DSRI 0.8351.34720.85220.71531.06970.65040.90670.88011.02720.932
GMI 0.97570.97780.98840.98280.96830.96420.96210.96710.97060.9648
AQI 0.99620.9490.94810.88830.93441.00141.00920.95091.0070.9553
SGI 1.07331.09191.11741.16421.18631.19711.19881.13461.08661.0296
DEPI 0.97890.95681.24131.06871.02231.06770.88310.94860.98780.9836
SGAI 0.99620.99160.98321.01381.04131.05541.06741.01690.98511.0089
LVGI 0.98520.90551.0091.04451.04450.99670.90290.89711.08121.2251
TATA 0.02040.0251-0.0034-0.0151-0.036-0.0371-0.0177-0.0296-0.0134-0.024
M-score -2.48-1.97-2.53-2.73-2.48-2.82-2.48-2.62-2.48-2.74
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