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ADT Beneish M-Score

: -2.97 (As of Today)
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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.

ADT has a M-score of -2.97 suggests that the company is not a manipulator.

NYSE:ADT' s Beneish M-Score Range Over the Past 10 Years
Min: -3.1   Med: -2.94   Max: -2.36
Current: -2.97

-3.1
-2.36

During the past 6 years, the highest Beneish M-Score of ADT was -2.36. The lowest was -3.10. And the median was -2.94.


ADT Beneish M-Score Historical Data

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

* Premium members only.

ADT Annual Data
Dec14 Dec15 Dec16 Dec17 Dec18 Dec19
Beneish M-Score Premium Member Only 0.00 0.00 0.00 -2.47 -2.92

ADT Quarterly Data
Dec14 Dec15 Sep16 Dec16 Mar17 Jun17 Sep17 Dec17 Mar18 Jun18 Sep18 Dec18 Mar19 Jun19 Sep19 Dec19 Mar20 Jun20 Sep20
Beneish M-Score Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only -2.36 -2.92 -2.95 -3.10 -2.97

Competitive Comparison
* Competitive companies are chosen from companies within the same industry, with headquarter located in same country, with closest market capitalization; x-axis shows the market cap, and y-axis shows the term value; the bigger the dot, the larger the market cap.


ADT Beneish M-Score Distribution

* The bar in red indicates where ADT's Beneish M-Score falls into.



ADT Beneish M-Score Calculation

The M-score was created by Professor Messod Beneish. Instead of measuring the bankruptcy risk (Altman Z-Score) or business trend (Piotroski 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 ADT 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 * 0.9621+0.528 * 1.0353+0.404 * 1.0104+0.892 * 1.057+0.115 * 0.9909
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.1287+4.679 * -0.1074-0.327 * 1.0181
=-2.97

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

This Year (Sep20) TTM:Last Year (Sep19) TTM:
Accounts Receivable was $290 Mil.
Revenue was 1298.924 + 1331.387 + 1369.752 + 1298.283 = $5,298 Mil.
Gross Profit was 941.029 + 955.04 + 961.766 + 928.602 = $3,786 Mil.
Total Current Assets was $1,180 Mil.
Total Assets was $16,366 Mil.
Property, Plant and Equipment(Net PPE) was $2,974 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,927 Mil.
Selling, General, & Admin. Expense(SGA) was $1,637 Mil.
Total Current Liabilities was $1,249 Mil.
Long-Term Debt & Capital Lease Obligation was $9,675 Mil.
Net Income was -113.098 + -106.741 + -300.293 + -71.993 = $-592 Mil.
Non Operating Income was -40.788 + -10.447 + -172.405 + -18.243 = $-242 Mil.
Cash Flow from Operations was 364.262 + 378.778 + 250.229 + 413.868 = $1,407 Mil.
Accounts Receivable was $285 Mil.
Revenue was 1300.57 + 1283.744 + 1243.06 + 1185.45 = $5,013 Mil.
Gross Profit was 944.014 + 945.655 + 917.102 + 902.019 = $3,709 Mil.
Total Current Assets was $1,319 Mil.
Total Assets was $16,947 Mil.
Property, Plant and Equipment(Net PPE) was $3,113 Mil.
(DDA) was $1,987 Mil.
Selling, General, & Admin. Expense(SGA) was $1,372 Mil.
Total Current Liabilities was $1,474 Mil.
Long-Term Debt & Capital Lease Obligation was $9,638 Mil.




1. DSRI = Days Sales in Receivables Index

Measured as the ratio of Revenue in Accounts Receivable 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)
=(289.68 / 5298.346) / (284.856 / 5012.824)
=0.05467367 / 0.05682545
=0.9621

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)
=(3708.79 / 5012.824) / (3786.437 / 5298.346)
=0.73986041 / 0.7146451
=1.0353

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 Property, Plant and Equipment to Total Assets.

AQI=(1 - (CurrentAssets_t + PPE_t) / TotalAssets_t) / (1 - (CurrentAssets_t-1 + PPE_t-1) / TotalAssets_t-1)
=(1 - (1179.911 + 2973.919) / 16366.067) / (1 - (1319.167 + 3112.725) / 16947.089)
=0.74619253 / 0.73848653
=1.0104

4. SGI = Sales Growth Index

Ratio of Revenue 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
=5298.346 / 5012.824
=1.057

5. DEPI = Depreciation Index

Measured as the ratio of the rate of Depreciation, Depletion and Amortization 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))
=(1986.735 / (1986.735 + 3112.725)) / (1926.747 / (1926.747 + 2973.919))
=0.38959713 / 0.39316024
=0.9909

6. SGAI = Sales, General and Administrative expenses Index

The ratio of Selling, General, & Admin. Expense(SGA) to Sales 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)
=(1636.905 / 5298.346) / (1372.141 / 5012.824)
=0.30894641 / 0.27372615
=1.1287

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 in leverage

LVGI=((LTD_t + CurrentLiabilities_t) / TotalAssets_t) / ((LTD_t-1 + CurrentLiabilities_t-1) / TotalAssets_t-1)
=((9675.43 + 1249.448) / 16366.067) / ((9638.118 + 1474.017) / 16947.089)
=0.66753228 / 0.6556958
=1.0181

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
=(-592.125 - -241.883 - 1407.137) / 16366.067
=-0.1074

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.

ADT has a M-score of -2.97 suggests that the company will not be a manipulator.


ADT Beneish M-Score Headlines

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