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Westinghouse Air Brake Technologies Corp (NYSE:WAB)
Beneish M-Score
-2.82 (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 -2.82 suggests that the company is not a manipulator.

WAB' s 10-Year Beneish M-Score Range
Min: -3.13   Max: -0.96
Current: -2.82

-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 * 0.6504+0.528 * 0.9642+0.404 * 1.0014+0.892 * 1.1971+0.115 * 1.0677
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0554+4.679 * -0.0371-0.327 * 0.9967
=-2.82

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

This Year (Mar15) TTM:Last Year (Mar14) TTM:
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.
Net Income was 96.164 + 92.686 + 90.155 + 88.705 = $368 Mil.
Non Operating Income was -2.866 + -1.752 + -0.154 + 0.243 = $-5 Mil.
Cash Flow from Operations was 43.661 + 242.221 + 92.505 + 111.444 = $490 Mil.
Accounts Receivable was $637 Mil.
Revenue was 695.249 + 681.482 + 631.398 + 638.002 = $2,646 Mil.
Gross Profit was 209.569 + 200.125 + 188.133 + 192.881 = $791 Mil.
Total Current Assets was $1,434 Mil.
Total Assets was $2,917 Mil.
Property, Plant and Equipment(Net PPE) was $274 Mil.
Depreciation, Depletion and Amortization(DDA) was $54 Mil.
Selling, General & Admin. Expense(SGA) was $268 Mil.
Total Current Liabilities was $581 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)
=(495.712 / 3167.799) / (636.654 / 2646.131)
=0.15648468 / 0.24059807
=0.6504

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)
=(254.297 / 2646.131) / (255.355 / 3167.799)
=0.29881665 / 0.30992118
=0.9642

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 - (1503.933 + 349.043) / 3167.507) / (1 - (1434.178 + 273.647) / 2916.519)
=0.41500492 / 0.41443035
=1.0014

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
=3167.799 / 2646.131
=1.1971

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))
=(53.601 / (53.601 + 273.647)) / (63.252 / (63.252 + 349.043))
=0.16379321 / 0.15341442
=1.0677

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)
=(339.229 / 3167.799) / (268.499 / 2646.131)
=0.10708666 / 0.10146852
=1.0554

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)
=((420.406 + 695.769) / 3167.507) / ((450.247 + 580.905) / 2916.519)
=0.3523828 / 0.35355573
=0.9967

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
=(367.71 - -4.529 - 489.831) / 3167.507
=-0.0371

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 -2.82 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

Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14Dec14Mar15
DSRI 0.92660.9441.00341.22990.8351.34720.85220.71531.06970.6504
GMI 0.9980.99060.96440.95760.97570.97780.98840.98280.96830.9642
AQI 1.05711.10081.04591.14950.99620.9490.94810.88830.93441.0014
SGI 1.21521.15631.1011.07771.07331.09191.11741.16421.18631.1971
DEPI 1.09751.04820.96740.99850.97890.95681.24131.06871.02231.0677
SGAI 0.81680.84180.95640.98280.99620.99160.98321.01381.04131.0554
LVGI 0.85320.94050.85930.87280.98520.90551.0091.04451.04450.9967
TATA 0.0064-0.00210.00830.02470.02040.0251-0.0034-0.0151-0.036-0.0371
M-score -2.21-2.31-2.30-2.00-2.48-1.97-2.53-2.73-2.48-2.82
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