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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.
During the past 7 years, the highest Beneish M-Score of Thermon Group Holdings Inc was -2.16. The lowest was -2.78. And the median was -2.54.
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 Thermon Group Holdings Inc 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 * 1.1594||+||0.528 * 1.0912||+||0.404 * 0.9753||+||0.892 * 0.9473||+||0.115 * 0.9798|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.096||+||4.679 * -0.0237||-||0.327 * 0.8267|
|This Year (Dec16) TTM:||Last Year (Dec15) TTM:|
|Accounts Receivable was $58.2 Mil.|
Revenue was 64.34 + 68.812 + 63.396 + 72.344 = $268.9 Mil.
Gross Profit was 28.619 + 28.924 + 26.114 + 32.095 = $115.8 Mil.
Total Current Assets was $190.9 Mil.
Total Assets was $445.9 Mil.
Property, Plant and Equipment(Net PPE) was $41.7 Mil.
Depreciation, Depletion and Amortization(DDA) was $17.6 Mil.
Selling, General & Admin. Expense(SGA) was $60.3 Mil.
Total Current Liabilities was $47.3 Mil.
Long-Term Debt was $65.2 Mil.
Net Income was 5.358 + 3.506 + 2.526 + 3.204 = $14.6 Mil.
Non Operating Income was -0.006 + -0.427 + 0.277 + -0.012 = $-0.2 Mil.
Cash Flow from Operations was 10.235 + 9.254 + -7.034 + 12.872 = $25.3 Mil.
|Accounts Receivable was $53.0 Mil.
Revenue was 74.427 + 69.934 + 65.223 + 74.256 = $283.8 Mil.
Gross Profit was 35.129 + 33.354 + 30.737 + 34.105 = $133.3 Mil.
Total Current Assets was $195.7 Mil.
Total Assets was $462.6 Mil.
Property, Plant and Equipment(Net PPE) was $40.0 Mil.
Depreciation, Depletion and Amortization(DDA) was $16.4 Mil.
Selling, General & Admin. Expense(SGA) was $58.1 Mil.
Total Current Liabilities was $56.8 Mil.
Long-Term Debt was $84.4 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)|
|=||(58.166 / 268.892)||/||(52.958 / 283.84)|
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)|
|=||(133.325 / 283.84)||/||(115.752 / 268.892)|
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 - (190.884 + 41.669) / 445.872)||/||(1 - (195.725 + 39.963) / 462.614)|
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))|
|=||(16.435 / (16.435 + 39.963))||/||(17.64 / (17.64 + 41.669))|
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)|
|=||(60.289 / 268.892)||/||(58.067 / 283.84)|
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)|
|=||((65.203 + 47.29) / 445.872)||/||((84.375 + 56.815) / 462.614)|
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|
|=||(14.594 - -0.168||-||25.327)||/||445.872|
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.
Thermon Group Holdings Inc has a M-score of -2.42 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
Thermon Group Holdings Inc Annual Data
Thermon Group Holdings Inc Quarterly Data