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Westinghouse Air Brake Technologies Corp (NYSE:WAB)
Beneish M-Score
-1.97 (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 -1.97 signals that the company is a manipulator.

WAB' s 10-Year Beneish M-Score Range
Min: -3.13   Max: -0.96
Current: -1.97

-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 -2.39.


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 * 1.3472+0.528 * 0.9778+0.404 * 0.949+0.892 * 1.0919+0.115 * 0.9568
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9916+4.679 * 0.0251-0.327 * 0.9055
=-1.97

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

This Year (Mar14) TTM:Last Year (Mar13) TTM:
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.
Net Income was 80.134 + 74.041 + 73.943 + 74.638 = $303 Mil.
Non Operating Income was -0.017 + 0.951 + -1.658 + 0.406 = $-0 Mil.
Cash Flow from Operations was 26.215 + 150.657 + 39.9 + 13.056 = $230 Mil.
Accounts Receivable was $433 Mil.
Revenue was 615.51 + 610.4 + 587.593 + 609.82 = $2,423 Mil.
Gross Profit was 182.888 + 180.48 + 171.279 + 173.427 = $708 Mil.
Total Current Assets was $1,169 Mil.
Total Assets was $2,506 Mil.
Property, Plant and Equipment(Net PPE) was $243 Mil.
Depreciation, Depletion and Amortization(DDA) was $45 Mil.
Selling, General & Admin. Expense(SGA) was $248 Mil.
Total Current Liabilities was $561 Mil.
Long-Term Debt was $418 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)
=(636.654 / 2646.131) / (432.797 / 2423.323)
=0.24059807 / 0.1785965
=1.3472

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)
=(200.125 / 2423.323) / (209.569 / 2646.131)
=0.29219134 / 0.29881665
=0.9778

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 - (1434.178 + 273.647) / 2916.519) / (1 - (1168.986 + 242.716) / 2506.175)
=0.41443035 / 0.43671053
=0.949

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
=2646.131 / 2423.323
=1.0919

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))
=(45.107 / (45.107 + 242.716)) / (53.601 / (53.601 + 273.647))
=0.15671784 / 0.16379321
=0.9568

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)
=(268.499 / 2646.131) / (247.98 / 2423.323)
=0.10146852 / 0.10233056
=0.9916

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)
=((450.247 + 580.905) / 2916.519) / ((417.527 + 560.981) / 2506.175)
=0.35355573 / 0.39043882
=0.9055

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
=(302.756 - -0.318 - 229.828) / 2916.519
=0.0251

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 -1.97 signals that the company is likely to 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

Dec04Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13
DSRI 0.94621.17610.81491.00211.06320.85531.15291.02740.92661.325
GMI 1.05730.9940.92021.00411.00180.96670.94171.02790.9980.9757
AQI 1.03470.80661.10851.0541.42241.14911.00650.92581.05710.9962
SGI 1.1451.25791.05181.25051.15780.89011.07521.30571.21521.0733
DEPI 0.95721.07581.0810.92071.09610.83920.94990.93791.09750.9789
SGAI 0.95840.83860.8020.9110.99261.06031.13160.96780.81680.9962
LVGI 0.87951.00890.86480.94971.28520.8480.96691.07160.85320.9852
TATA -0.0281-0.0305-0.0666-0.0253-0.0193-0.0298-0.0294-0.03620.00640.0204
M-score -2.45-2.28-2.83-2.33-2.28-2.79-2.46-2.39-2.21-2.03

Westinghouse Air Brake Technologies Corp Quarterly Data

Dec11Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14
DSRI 1.02740.98921.00450.97950.92660.9441.00341.22991.3251.3472
GMI 1.02791.02431.03221.03720.9980.99060.96440.95760.97570.9778
AQI 0.92580.90050.96340.97321.05711.10081.04591.14950.99620.949
SGI 1.30571.31121.30741.26781.21521.15631.1011.07771.07331.0919
DEPI 0.93790.96960.99071.13251.09751.04820.96740.99850.97890.9568
SGAI 0.96780.94280.80230.79590.81680.84180.95640.98280.99620.9916
LVGI 1.07161.06211.05490.99420.85320.94050.85930.87280.98520.9055
TATA -0.0362-0.01970.0017-0.0120.0064-0.00210.00830.02470.02040.0251
M-score -2.39-2.35-2.18-2.26-2.21-2.31-2.30-2.00-2.03-1.97
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