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Targa Resources Corp (NYSE:TRGP)
Beneish M-Score
-2.66 (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 -2.66 suggests that the company is not a manipulator.

TRGP' s 10-Year Beneish M-Score Range
Min: -3.49   Max: -1.63
Current: -2.66

-3.49
-1.63

During the past 6 years, the highest Beneish M-Score of Targa Resources Corp was -1.63. The lowest was -3.49. And the median was -2.61.


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 * 1.1096+0.528 * 1.0232+0.404 * 0.7919+0.892 * 1.4117+0.115 * 0.9023
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.8102+4.679 * -0.0921-0.327 * 0.9903
=-2.66

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

This Year (Jun14) TTM:Last Year (Jun13) TTM:
Accounts Receivable was $683 Mil.
Revenue was 2061.9 + 2352.9 + 2159.8 + 1556.8 = $8,131 Mil.
Gross Profit was 384 + 379.6 + 355.1 + 297 = $1,416 Mil.
Total Current Assets was $939 Mil.
Total Assets was $6,328 Mil.
Property, Plant and Equipment(Net PPE) was $4,624 Mil.
Depreciation, Depletion and Amortization(DDA) was $308 Mil.
Selling, General & Admin. Expense(SGA) was $367 Mil.
Total Current Liabilities was $819 Mil.
Long-Term Debt was $3,048 Mil.
Net Income was 26.4 + 19.6 + 20.5 + 16.3 = $83 Mil.
Non Operating Income was 4.1 + 4.9 + 4.7 + 7.3 = $21 Mil.
Cash Flow from Operations was 105.8 + 318.7 + 124.6 + 95.4 = $645 Mil.
Accounts Receivable was $436 Mil.
Revenue was 1441.6 + 1397.8 + 1527.3 + 1393.5 = $5,760 Mil.
Gross Profit was 265.2 + 260.3 + 260.1 + 240.5 = $1,026 Mil.
Total Current Assets was $698 Mil.
Total Assets was $5,407 Mil.
Property, Plant and Equipment(Net PPE) was $3,883 Mil.
Depreciation, Depletion and Amortization(DDA) was $232 Mil.
Selling, General & Admin. Expense(SGA) was $144 Mil.
Total Current Liabilities was $609 Mil.
Long-Term Debt was $2,728 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)
=(682.6 / 8131.4) / (435.8 / 5760.2)
=0.08394618 / 0.0756571
=1.1096

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)
=(379.6 / 5760.2) / (384 / 8131.4)
=0.17813618 / 0.17410286
=1.0232

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 - (939.2 + 4623.8) / 6328.4) / (1 - (697.9 + 3883.4) / 5407.1)
=0.12094684 / 0.15272512
=0.7919

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
=8131.4 / 5760.2
=1.4117

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))
=(231.6 / (231.6 + 3883.4)) / (307.6 / (307.6 + 4623.8))
=0.0562819 / 0.0623758
=0.9023

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)
=(367.2 / 8131.4) / (143.7 / 5760.2)
=0.04515828 / 0.02494705
=1.8102

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)
=((3048.2 + 818.9) / 6328.4) / ((2728 + 608.6) / 5407.1)
=0.61107073 / 0.61707755
=0.9903

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
=(82.8 - 21 - 644.5) / 6328.4
=-0.0921

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 -2.66 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

Dec08Dec09Dec10Dec11Dec12Dec13
DSRI 1.06291.1487
GMI 0.79870.9523
AQI 4.31480.8114
SGI 0.84151.1139
DEPI 1.14040.8991
SGAI 1.22070.9729
LVGI 1.0281.0036
TATA -0.0726-0.0551
M-score -1.70-2.61

Targa Resources Corp Quarterly Data

Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14
DSRI 0.68390.80011.06271.15121.35911.27231.14871.07151.1096
GMI 0.96290.87660.79890.79840.84360.87490.95221.03281.0232
AQI 1.14650.53124.31483.94523.46773.55450.81140.8050.7919
SGI 1.08560.95530.84160.8030.87110.94141.11391.33231.4117
DEPI 1.0721.04791.14041.10371.05961.01640.89910.90620.9023
SGAI 0.78830.85291.21881.28741.20411.12730.97361.37021.8102
LVGI 0.98710.97671.0281.11171.11191.05831.00360.98350.9903
TATA -0.0885-0.1211-0.0726-0.078-0.0594-0.0583-0.055-0.0784-0.0921
M-score -3.02-3.49-1.70-1.87-1.69-1.63-2.61-2.62-2.66
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