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Westinghouse Air Brake Technologies Corp (NYSE:WAB)
Beneish M-Score
-2.67 (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 -2.67 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: -2.67

-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 -2.43.


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 * 1.1048+0.528 * 0.9693+0.404 * 1.0071+0.892 * 0.9114+0.115 * 0.9967
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0451+4.679 * -0.0214-0.327 * 1.2682
=-2.67

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

This Year (Sep16) TTM:Last Year (Sep15) TTM:
Accounts Receivable was $478 Mil.
Revenue was 675.574 + 723.601 + 772.031 + 832.849 = $3,004 Mil.
Gross Profit was 212.481 + 237.389 + 255.18 + 267.628 = $973 Mil.
Total Current Assets was $1,695 Mil.
Total Assets was $3,428 Mil.
Property, Plant and Equipment(Net PPE) was $358 Mil.
Depreciation, Depletion and Amortization(DDA) was $66 Mil.
Selling, General & Admin. Expense(SGA) was $333 Mil.
Total Current Liabilities was $625 Mil.
Long-Term Debt was $820 Mil.
Net Income was 82.428 + 90.485 + 94.163 + 101.779 = $369 Mil.
Non Operating Income was 1.188 + -1.229 + 0.154 + 2.379 = $2 Mil.
Cash Flow from Operations was 32.917 + 138.41 + 75.566 + 192.954 = $440 Mil.
Accounts Receivable was $474 Mil.
Revenue was 809.527 + 847.028 + 818.594 + 820.866 = $3,296 Mil.
Gross Profit was 257.069 + 267.764 + 255.355 + 254.297 = $1,034 Mil.
Total Current Assets was $1,650 Mil.
Total Assets was $3,326 Mil.
Property, Plant and Equipment(Net PPE) was $351 Mil.
Depreciation, Depletion and Amortization(DDA) was $64 Mil.
Selling, General & Admin. Expense(SGA) was $349 Mil.
Total Current Liabilities was $655 Mil.
Long-Term Debt was $451 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)
=(477.5 / 3004.055) / (474.213 / 3296.015)
=0.15895182 / 0.14387465
=1.1048

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)
=(1034.485 / 3296.015) / (972.678 / 3004.055)
=0.31385931 / 0.32378835
=0.9693

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 - (1695.132 + 357.97) / 3428.157) / (1 - (1650.091 + 351.234) / 3326.082)
=0.40110619 / 0.39829355
=1.0071

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
=3004.055 / 3296.015
=0.9114

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))
=(64.451 / (64.451 + 351.234)) / (65.942 / (65.942 + 357.97))
=0.15504769 / 0.15555587
=0.9967

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)
=(332.522 / 3004.055) / (349.086 / 3296.015)
=0.11069105 / 0.10591153
=1.0451

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)
=((819.77 + 624.935) / 3428.157) / ((450.589 + 654.649) / 3326.082)
=0.42142323 / 0.33229427
=1.2682

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
=(368.855 - 2.492 - 439.847) / 3428.157
=-0.0214

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 -2.67 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 local exchange's 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 -0.0666-0.0253-0.0193-0.0298-0.0294-0.03620.00640.0204-0.036-0.0134
M-score -2.83-2.33-2.28-2.79-2.46-2.39-2.21-2.48-2.48-2.48

Westinghouse Air Brake Technologies Corp Quarterly Data

Jun14Sep14Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16
DSRI 0.85220.71531.06970.65040.90670.88011.02720.9320.91261.1048
GMI 0.98840.98280.96830.96420.96210.96710.97060.96480.96280.9693
AQI 0.94810.88830.93441.00141.00920.95091.0070.95530.95381.0071
SGI 1.11741.16421.18631.19711.19881.13461.08661.02960.95560.9114
DEPI 1.24131.06871.02231.06770.88310.94860.98780.98360.96530.9967
SGAI 0.98321.01381.04131.05541.06741.01690.98511.00891.01331.0451
LVGI 1.0091.04451.04450.99670.90290.89711.08121.22511.251.2682
TATA -0.0034-0.0151-0.036-0.0371-0.0177-0.0296-0.0134-0.024-0.0486-0.0214
M-score -2.53-2.73-2.48-2.82-2.48-2.62-2.48-2.74-2.95-2.67
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