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Titanium Metals Corporation (NYSE:TIE)
Beneish M-Score
-2.58 (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.

Titanium Metals Corporation has a M-score of -1.77 signals that the company is a manipulator.

TIE' s 10-Year Beneish M-Score Range
Min: -19.59   Max: -1.8
Current: -2.58

-19.59
-1.8

During the past 13 years, the highest Beneish M-Score of Titanium Metals Corporation was -1.80. The lowest was -19.59. And the median was -2.36.


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 Titanium Metals Corporation 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 * 1.0008+0.528 * 0.975+0.404 * 1.4544+0.892 * 1.2193+0.115 * 1.0449
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9346+4.679 * 0.0962-0.327 * 1.3733
=-1.77

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

This Year (Dec11) TTM:Last Year (Dec10) TTM:
Accounts Receivable was $184 Mil.
Revenue was $1,045 Mil.
Gross Profit was $224 Mil.
Total Current Assets was $960 Mil.
Total Assets was $1,622 Mil.
Property, Plant and Equipment(Net PPE) was $386 Mil.
Depreciation, Depletion and Amortization(DDA) was $51 Mil.
Selling, General & Admin. Expense(SGA) was $65 Mil.
Total Current Liabilities was $183 Mil.
Long-Term Debt was $0 Mil.
Net Income was $114 Mil.
Non Operating Income was $0 Mil.
Cash Flow from Operations was $-42 Mil.
Accounts Receivable was $151 Mil.
Revenue was $857 Mil.
Gross Profit was $179 Mil.
Total Current Assets was $941 Mil.
Total Assets was $1,498 Mil.
Property, Plant and Equipment(Net PPE) was $382 Mil.
Depreciation, Depletion and Amortization(DDA) was $53 Mil.
Selling, General & Admin. Expense(SGA) was $57 Mil.
Total Current Liabilities was $123 Mil.
Long-Term Debt was $0 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)
=(183.9 / 1045.2) / (150.7 / 857.2)
=0.17594719 / 0.17580495
=1.0008

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)
=( / 857.2) / ( / 1045.2)
=0.20858609 / 0.21393035
=0.975

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 - (959.5 + 385.8) / 1622) / (1 - (940.7 + 381.6) / 1498)
=0.17059186 / 0.11728972
=1.4544

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
=1045.2 / 857.2
=1.2193

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))
=(52.5 / (52.5 + 381.6)) / (50.5 / (50.5 + 385.8))
=0.12093988 / 0.11574605
=1.0449

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)
=(64.5 / 1045.2) / (56.6 / 857.2)
=0.06171068 / 0.06602893
=0.9346

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)
=((0 + 182.6) / 1622) / ((0 + 122.8) / 1498)
=0.11257707 / 0.08197597
=1.3733

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
=(114 - 0 - -42) / 1622
=0.0962

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.

Titanium Metals Corporation has a M-score of -1.77 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.

Titanium Metals Corporation Annual Data

Dec02Dec03Dec04Dec05Dec06Dec07Dec08Dec09Dec10Dec11
DSRI 1.19590.93241.10170.98850.94460.91160.78151.27921.07141.0008
GMI -25.0985-0.19280.39670.41910.72141.05361.40021.70680.70180.975
AQI 0.50081.11451.52970.81380.92810.92741.12411.0151.04191.4544
SGI 0.64451.05131.30241.49411.5781.08090.90040.67221.10751.2193
DEPI 1.00070.95871.05441.13491.18440.96330.96690.91220.91071.0449
SGAI 1.28820.80610.94630.79950.79190.95221.07041.35130.84610.9346
LVGI 0.9510.80761.6840.94270.70250.72130.88920.68181.08041.3733
TATA -0.1737-0.1390.09370.09150.16620.0536-0.0257-0.125-0.02720.0962
M-score -17.44-3.64-1.99-1.93-1.26-2.14-2.61-2.69-2.60-1.77
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