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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 -2.53 suggests that the company is not a manipulator.
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.
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 * 0.8522||+||0.528 * 0.9884||+||0.404 * 0.9481||+||0.892 * 1.1174||+||0.115 * 1.2413|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9832||+||4.679 * -0.0034||-||0.327 * 1.009|
|This Year (Jun14) TTM:||Last Year (Jun13) TTM:|
|Accounts Receivable was $465 Mil.|
Revenue was 731.068 + 695.249 + 681.482 + 631.398 = $2,739 Mil.
Gross Profit was 224.658 + 209.569 + 200.125 + 188.133 = $822 Mil.
Total Current Assets was $1,527 Mil.
Total Assets was $3,164 Mil.
Property, Plant and Equipment(Net PPE) was $343 Mil.
Depreciation, Depletion and Amortization(DDA) was $54 Mil.
Selling, General & Admin. Expense(SGA) was $278 Mil.
Total Current Liabilities was $668 Mil.
Long-Term Debt was $500 Mil.
Net Income was 88.705 + 80.134 + 74.041 + 73.943 = $317 Mil.
Non Operating Income was 0.243 + -0.017 + 0.951 + -1.658 = $-0 Mil.
Cash Flow from Operations was 111.444 + 26.215 + 150.657 + 39.9 = $328 Mil.
|Accounts Receivable was $488 Mil.
Revenue was 638.002 + 615.51 + 610.4 + 587.593 = $2,452 Mil.
Gross Profit was 192.881 + 182.888 + 180.48 + 171.279 = $728 Mil.
Total Current Assets was $1,190 Mil.
Total Assets was $2,516 Mil.
Property, Plant and Equipment(Net PPE) was $241 Mil.
Depreciation, Depletion and Amortization(DDA) was $49 Mil.
Selling, General & Admin. Expense(SGA) was $253 Mil.
Total Current Liabilities was $524 Mil.
Long-Term Debt was $397 Mil.
1. DSRI = Days Sales in Receivables Index
A large increase in DSR could be indicative of revenue inflation.
|DSRI||=||(Receivables_t / Revenue_t)||/||(Receivables_t-1 / Revenue_t-1)|
|=||(465.092 / 2739.197)||/||(488.449 / 2451.505)|
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.
|=||(GrossProfit_t-1 / Revenue_t-1)||/||(GrossProfit_t / Revenue_t)|
|=||(209.569 / 2451.505)||/||(224.658 / 2739.197)|
3. AQI = Asset Quality Index
AQI is the ratio of asset quality in year t to year t-1.
|AQI||=||(1 - (CurrentAssets_t + PPE_t) / TotalAssets_t)||/||(1 - (CurrentAssets_t-1 + PPE_t-1) / TotalAssets_t-1)|
|=||(1 - (1526.851 + 343.154) / 3163.868)||/||(1 - (1189.985 + 240.966) / 2516.39)|
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.
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))|
|=||(48.961 / (48.961 + 240.966))||/||(54.036 / (54.036 + 343.154))|
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)|
|=||(277.607 / 2739.197)||/||(252.691 / 2451.505)|
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)|
|=||((500.219 + 668.416) / 3163.868)||/||((396.915 + 524.272) / 2516.39)|
8. TATA = Total Accruals to Total Assets
Total accruals calculated as the change in working capital accounts other than cash less depreciation.
|=||(NetIncome_t - NonOperatingIncome_t||-||CashFlowsfromOperations_t)||/||TotalAssets_t|
|=||(316.823 - -0.481||-||328.216)||/||3163.868|
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 -2.53 suggests that the company will not be a manipulator.
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
Westinghouse Air Brake Technologies Corp Annual Data
Westinghouse Air Brake Technologies Corp Quarterly Data