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Targa Resources Corp (NYSE:TRGP)
Beneish M-Score
-3.20 (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.

Targa Resources Corp has a M-score of -3.20 suggests that the company is not a manipulator.

TRGP' s Beneish M-Score Range Over the Past 10 Years
Min: -3.45   Max: -2.15
Current: -3.2

-3.45
-2.15

During the past 8 years, the highest Beneish M-Score of Targa Resources Corp was -2.15. The lowest was -3.45. And the median was -2.42.


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 Targa Resources 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 * 0.9934+0.528 * 0.7894+0.404 * 0.9268+0.892 * 0.8189+0.115 * 0.6239
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.2364+4.679 * -0.0771-0.327 * 0.8838
=-3.20

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

This Year (Jun16) TTM:Last Year (Jun15) TTM:
Accounts Receivable was $490 Mil.
Revenue was 1583.6 + 1442.4 + 1647.4 + 1632.1 = $6,306 Mil.
Gross Profit was 299.5 + 299.3 + 329.4 + 326.1 = $1,254 Mil.
Total Current Assets was $857 Mil.
Total Assets was $13,000 Mil.
Property, Plant and Equipment(Net PPE) was $9,703 Mil.
Depreciation, Depletion and Amortization(DDA) was $774 Mil.
Selling, General & Admin. Expense(SGA) was $162 Mil.
Total Current Liabilities was $938 Mil.
Long-Term Debt was $4,778 Mil.
Net Income was -23.2 + -2.7 + 26.9 + 12.7 = $14 Mil.
Non Operating Income was -7.8 + 19.8 + -3.3 + -0.1 = $9 Mil.
Cash Flow from Operations was 216.2 + 241.3 + 339.2 + 211.3 = $1,008 Mil.
Accounts Receivable was $603 Mil.
Revenue was 1699.4 + 1679.7 + 2032.8 + 2288.3 = $7,700 Mil.
Gross Profit was 325.5 + 300 + 288.7 + 295 = $1,209 Mil.
Total Current Assets was $964 Mil.
Total Assets was $13,353 Mil.
Property, Plant and Equipment(Net PPE) was $9,684 Mil.
Depreciation, Depletion and Amortization(DDA) was $468 Mil.
Selling, General & Admin. Expense(SGA) was $160 Mil.
Total Current Liabilities was $847 Mil.
Long-Term Debt was $5,796 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)
=(490.1 / 6305.5) / (602.5 / 7700.2)
=0.07772579 / 0.07824472
=0.9934

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)
=(1209.2 / 7700.2) / (1254.3 / 6305.5)
=0.15703488 / 0.19892158
=0.7894

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 - (856.7 + 9702.5) / 13000.1) / (1 - (963.5 + 9684.3) / 13352.9)
=0.18776009 / 0.20258521
=0.9268

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
=6305.5 / 7700.2
=0.8189

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))
=(468.1 / (468.1 + 9684.3)) / (774.2 / (774.2 + 9702.5))
=0.04610732 / 0.07389731
=0.6239

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)
=(162.4 / 6305.5) / (160.4 / 7700.2)
=0.02575529 / 0.02083063
=1.2364

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)
=((4778.3 + 937.6) / 13000.1) / ((5796.1 + 847) / 13352.9)
=0.43968123 / 0.49750242
=0.8838

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
=(13.7 - 8.6 - 1008) / 13000.1
=-0.0771

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.

Targa Resources Corp has a M-score of -3.20 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.

Targa Resources Corp Annual Data

Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15
DSRI 0.9560.9661.10161.15070.63111.1766
GMI 1.1521.04350.77061.39710.96190.6856
AQI 1.79110.95654.31480.81140.87271.7166
SGI 1.20731.27730.81191.11191.36450.7728
DEPI 0.95441.07911.14040.89910.86751.0396
SGAI 0.99340.73794.09850.30080.71591.4138
LVGI 0.99760.94711.0281.00360.92540.8714
TATA -0.0651-0.0917-0.0726-0.0551-0.1018-0.0707
M-score -2.24-2.62-2.20-2.26-2.98-2.75

Targa Resources Corp Quarterly Data

Mar14Jun14Sep14Dec14Mar15Jun15Sep15Dec15Mar16Jun16
DSRI 1.0611.10590.90680.64061.01070.90161.09721.17660.79010.9934
GMI 1.54261.25091.30850.88540.86960.9890.8610.81280.79460.7894
AQI 0.8050.79190.81440.87271.55041.6751.73171.71660.96490.9268
SGI 1.34541.41641.54431.34431.09510.9790.81080.77280.80250.8189
DEPI 0.90620.90230.88890.86751.5861.35281.22531.03960.5320.6239
SGAI 0.35420.47750.44271.12480.92030.44620.53740.58340.79071.2364
LVGI 0.98350.99030.97740.92540.83050.81410.83520.87140.8660.8838
TATA -0.0753-0.0891-0.084-0.1018-0.0432-0.0521-0.0616-0.0705-0.0744-0.0771
M-score -2.15-2.30-2.29-3.10-2.30-2.37-2.47-2.54-3.29-3.20
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