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Targa Resources Corp (NYSE:TRGP)
Beneish M-Score
-2.90 (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 -2.90 suggests that the company is not a manipulator.

TRGP' s Beneish M-Score Range Over the Past 10 Years
Min: -3.49   Max: -1.7
Current: -2.9

-3.49
-1.7

During the past 7 years, the highest Beneish M-Score of Targa Resources Corp was -1.70. The lowest was -3.49. And the median was -2.62.


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 * 1.0972+0.528 * 0.5964+0.404 * 1.7317+0.892 * 0.8108+0.115 * 1.2253
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 2.2188+4.679 * -0.0618-0.327 * 0.8352
=-2.90

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

This Year (Sep15) TTM:Last Year (Sep14) TTM:
Accounts Receivable was $621 Mil.
Revenue was 1632.1 + 1699.4 + 1679.7 + 2032.8 = $7,044 Mil.
Gross Profit was 326.1 + 462.4 + 411.4 + 721.8 = $1,922 Mil.
Total Current Assets was $1,001 Mil.
Total Assets was $13,418 Mil.
Property, Plant and Equipment(Net PPE) was $9,750 Mil.
Depreciation, Depletion and Amortization(DDA) was $546 Mil.
Selling, General & Admin. Expense(SGA) was $844 Mil.
Total Current Liabilities was $862 Mil.
Long-Term Debt was $5,939 Mil.
Net Income was 12.7 + 15.2 + 3.2 + 25.5 = $57 Mil.
Non Operating Income was -0.1 + -3.6 + -32.5 + -15.6 = $-52 Mil.
Cash Flow from Operations was 211.3 + 191.6 + 292.6 + 242.7 = $938 Mil.
Accounts Receivable was $698 Mil.
Revenue was 2288.3 + 2000.6 + 2294.7 + 2104.4 = $8,688 Mil.
Gross Profit was 295 + 384 + 379.6 + 355.1 = $1,414 Mil.
Total Current Assets was $1,053 Mil.
Total Assets was $6,492 Mil.
Property, Plant and Equipment(Net PPE) was $4,694 Mil.
Depreciation, Depletion and Amortization(DDA) was $326 Mil.
Selling, General & Admin. Expense(SGA) was $469 Mil.
Total Current Liabilities was $803 Mil.
Long-Term Debt was $3,137 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)
=(621 / 7044) / (698.1 / 8688)
=0.08816014 / 0.08035221
=1.0972

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)
=(462.4 / 8688) / (326.1 / 7044)
=0.16271869 / 0.27281374
=0.5964

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 - (1001.1 + 9750.2) / 13418.2) / (1 - (1053.1 + 4693.7) / 6491.9)
=0.19875244 / 0.1147738
=1.7317

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
=7044 / 8688
=0.8108

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))
=(326.3 / (326.3 + 4693.7)) / (546.2 / (546.2 + 9750.2))
=0.065 / 0.05304767
=1.2253

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)
=(843.7 / 7044) / (469 / 8688)
=0.1197757 / 0.0539825
=2.2188

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)
=((5938.8 + 862.2) / 13418.2) / ((3137.2 + 802.7) / 6491.9)
=0.50684891 / 0.60689475
=0.8352

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
=(56.6 - -51.8 - 938.2) / 13418.2
=-0.0618

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 -2.90 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 0.9560.9661.06291.19250.6311
GMI 1.1521.04350.79870.91731.0236
AQI 1.79110.95654.31480.81140.8727
SGI 1.20731.27730.84151.07291.3645
DEPI 0.95441.07911.14040.89910.8675
SGAI 0.99340.73791.22073.51890.8069
LVGI 0.99760.94711.0281.00360.9255
TATA -0.0651-0.0917-0.0726-0.0551-0.1018
M-score -2.24-2.62-1.70-3.06-2.97

Targa Resources Corp Quarterly Data

Jun13Sep13Dec13Mar14Jun14Sep14Dec14Mar15Jun15Sep15
DSRI 1.35911.29211.17491.10141.1470.94020.64061.01070.90161.0972
GMI 0.84360.86140.9311.00470.98971.14070.88910.78370.73310.5964
AQI 3.46773.55450.81140.8050.79190.81440.87271.55041.6751.7317
SGI 0.87110.92691.0891.2961.36551.48951.34431.09510.9790.8108
DEPI 1.05961.01640.89910.90620.90230.88890.86751.58211.35281.2253
SGAI 2.73083.34333.4711.86051.26130.741.11681.34061.5322.2188
LVGI 1.11191.05831.00360.98350.99030.97740.92550.83050.81410.8352
TATA -0.0629-0.0616-0.055-0.0753-0.0891-0.084-0.1018-0.0448-0.0524-0.0618
M-score -1.97-2.03-3.05-2.70-2.58-2.45-3.10-2.42-2.69-2.90
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