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Westinghouse Air Brake Technologies Corp (NYSE:WAB)
Beneish M-Score
-2.73 (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 -2.73 suggests that the company is not a manipulator.

WAB' s 10-Year Beneish M-Score Range
Min: -3.13   Max: -0.96
Current: -2.73

-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 -2.40.


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 * 0.7153+0.528 * 0.9828+0.404 * 0.8883+0.892 * 1.1642+0.115 * 1.0687
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0138+4.679 * -0.0151-0.327 * 1.0445
=-2.73

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

This Year (Sep14) TTM:Last Year (Sep13) TTM:
Accounts Receivable was $475 Mil.
Revenue was 797.271 + 731.068 + 695.249 + 681.482 = $2,905 Mil.
Gross Profit was 247.458 + 224.658 + 209.569 + 200.125 = $882 Mil.
Total Current Assets was $1,534 Mil.
Total Assets was $3,228 Mil.
Property, Plant and Equipment(Net PPE) was $342 Mil.
Depreciation, Depletion and Amortization(DDA) was $59 Mil.
Selling, General & Admin. Expense(SGA) was $303 Mil.
Total Current Liabilities was $675 Mil.
Long-Term Debt was $521 Mil.
Net Income was 90.155 + 88.705 + 80.134 + 74.041 = $333 Mil.
Non Operating Income was -0.154 + 0.243 + -0.017 + 0.951 = $1 Mil.
Cash Flow from Operations was 92.505 + 111.444 + 26.215 + 150.657 = $381 Mil.
Accounts Receivable was $570 Mil.
Revenue was 631.398 + 638.002 + 615.51 + 610.4 = $2,495 Mil.
Gross Profit was 188.133 + 192.881 + 182.888 + 180.48 = $744 Mil.
Total Current Assets was $1,344 Mil.
Total Assets was $3,049 Mil.
Property, Plant and Equipment(Net PPE) was $267 Mil.
Depreciation, Depletion and Amortization(DDA) was $50 Mil.
Selling, General & Admin. Expense(SGA) was $256 Mil.
Total Current Liabilities was $542 Mil.
Long-Term Debt was $540 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)
=(474.93 / 2905.07) / (570.276 / 2495.31)
=0.16348315 / 0.22853914
=0.7153

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)
=(224.658 / 2495.31) / (247.458 / 2905.07)
=0.29831243 / 0.30354174
=0.9828

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 - (1533.808 + 342.365) / 3228.387) / (1 - (1344.434 + 266.95) / 3049.144)
=0.41885127 / 0.47152906
=0.8883

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
=2905.07 / 2495.31
=1.1642

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))
=(49.783 / (49.783 + 266.95)) / (59.035 / (59.035 + 342.365))
=0.15717655 / 0.14707275
=1.0687

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)
=(302.564 / 2905.07) / (256.35 / 2495.31)
=0.10415033 / 0.10273273
=1.0138

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)
=((521.087 + 674.748) / 3228.387) / ((539.606 + 541.758) / 3049.144)
=0.37041253 / 0.35464511
=1.0445

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
=(333.035 - 1.023 - 380.821) / 3228.387
=-0.0151

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 -2.73 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

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

Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14
DSRI 1.00450.97950.92660.9441.00341.22991.3251.34720.85220.7153
GMI 1.03221.03720.9980.99060.96440.95760.97570.97780.98840.9828
AQI 0.96340.97321.05711.10081.04591.14950.99620.9490.94810.8883
SGI 1.30741.26781.21521.15631.1011.07771.07331.09191.11741.1642
DEPI 0.99071.13251.09751.04820.96740.99850.97890.95681.24131.0687
SGAI 0.80230.79590.81680.84180.95640.98280.99620.99160.98321.0138
LVGI 1.05490.99420.85320.94050.85930.87280.98520.90551.0091.0445
TATA 0.0017-0.0120.0064-0.00210.00830.02470.02040.0251-0.0034-0.0151
M-score -2.18-2.26-2.21-2.31-2.30-2.00-2.03-1.97-2.53-2.73
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