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Targa Resources Corp (NYSE:TRGP)
Beneish M-Score
-2.97 (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 -2.97 suggests that the company is not a manipulator.

TRGP' s 10-Year Beneish M-Score Range
Min: -3.05   Max: -1.7
Current: -2.97

-3.05
-1.7

During the past 7 years, the highest Beneish M-Score of Targa Resources Corp was -1.70. The lowest was -3.05. And the median was -2.97.


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 * 0.6318+0.528 * 1.0226+0.404 * 0.8727+0.892 * 1.3629+0.115 * 0.8675
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.8083+4.679 * -0.1018-0.327 * 0.9255
=-2.97

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

This Year (Dec14) TTM:Last Year (Dec13) TTM:
Accounts Receivable was $567 Mil.
Revenue was 2032.8 + 2288.3 + 2061.9 + 2352.9 = $8,736 Mil.
Gross Profit was 398.1 + 407.8 + 384 + 379.6 = $1,570 Mil.
Total Current Assets was $883 Mil.
Total Assets was $6,454 Mil.
Property, Plant and Equipment(Net PPE) was $4,825 Mil.
Depreciation, Depletion and Amortization(DDA) was $351 Mil.
Selling, General & Admin. Expense(SGA) was $581 Mil.
Total Current Liabilities was $827 Mil.
Long-Term Debt was $2,885 Mil.
Net Income was 25.5 + 30.7 + 26.4 + 19.6 = $102 Mil.
Non Operating Income was -15.6 + 4.1 + 4.1 + 4.9 = $-3 Mil.
Cash Flow from Operations was 242.7 + 94.6 + 105.8 + 318.7 = $762 Mil.
Accounts Receivable was $659 Mil.
Revenue was 2104.4 + 1466 + 1441.6 + 1397.8 = $6,410 Mil.
Gross Profit was 355.1 + 297 + 265.2 + 260.3 = $1,178 Mil.
Total Current Assets was $897 Mil.
Total Assets was $6,049 Mil.
Property, Plant and Equipment(Net PPE) was $4,350 Mil.
Depreciation, Depletion and Amortization(DDA) was $272 Mil.
Selling, General & Admin. Expense(SGA) was $528 Mil.
Total Current Liabilities was $770 Mil.
Long-Term Debt was $2,989 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)
=(567.3 / 8735.9) / (658.8 / 6409.8)
=0.06493893 / 0.10278012
=0.6318

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)
=(407.8 / 6409.8) / (398.1 / 8735.9)
=0.18371868 / 0.17966094
=1.0226

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 - (882.6 + 4824.6) / 6453.5) / (1 - (897.2 + 4349.9) / 6048.6)
=0.11564267 / 0.13251
=0.8727

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
=8735.9 / 6409.8
=1.3629

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))
=(271.9 / (271.9 + 4349.9)) / (351 / (351 + 4824.6))
=0.05882989 / 0.06781822
=0.8675

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)
=(581.3 / 8735.9) / (527.7 / 6409.8)
=0.06654151 / 0.08232706
=0.8083

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)
=((2885.4 + 827.1) / 6453.5) / ((2989.3 + 770.4) / 6048.6)
=0.57526923 / 0.62158185
=0.9255

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
=(102.2 - -2.5 - 761.8) / 6453.5
=-0.1018

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 -2.97 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

Dec08Dec09Dec10Dec11Dec12Dec13Dec14
DSRI 1.06291.19250.6311
GMI 0.79870.91731.0236
AQI 4.31480.81140.8727
SGI 0.84151.07291.3645
DEPI 1.14040.89910.8675
SGAI 1.22073.51890.8069
LVGI 1.0281.00360.9255
TATA -0.0726-0.0551-0.1018
M-score -1.70-3.06-2.97

Targa Resources Corp Quarterly Data

Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14Dec14
DSRI 0.80031.06291.15131.35911.29211.17491.09271.12990.92740.6318
GMI 0.87540.79870.79830.84360.86140.9311.01271.00481.07091.0226
AQI 0.53124.31483.94523.46773.55450.81140.8050.79190.81440.8727
SGI 0.95510.84150.80290.87110.92691.0891.30641.38631.511.3629
DEPI 1.05071.14041.10371.05961.01640.89910.90620.90230.88890.8675
SGAI 0.85321.21892.07372.73083.34333.4711.84581.24240.90550.8083
LVGI 0.97671.0281.11171.11191.05831.00360.98350.99030.97740.9255
TATA -0.1211-0.0726-0.0816-0.0629-0.0616-0.055-0.0753-0.0891-0.084-0.1018
M-score -3.49-1.70-2.02-1.97-2.03-3.05-2.70-2.56-2.51-2.97
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