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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.
During the past 13 years, the highest Beneish M-Score of Trimble Inc was 2.27. The lowest was -4.97. And the median was -2.56.
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 Trimble Inc 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 * 1.0525||+||0.528 * 1.0044||+||0.404 * 0.9671||+||0.892 * 1.0182||+||0.115 * 0.9736|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0524||+||4.679 * -0.0691||-||0.327 * 0.9369|
|This Year (Sep16) TTM:||Last Year (Sep15) TTM:|
|Accounts Receivable was $369 Mil.|
Revenue was 584.1 + 609.6 + 583 + 559.7 = $2,336 Mil.
Gross Profit was 309 + 315.6 + 300.6 + 293.1 = $1,218 Mil.
Total Current Assets was $958 Mil.
Total Assets was $3,731 Mil.
Property, Plant and Equipment(Net PPE) was $149 Mil.
Depreciation, Depletion and Amortization(DDA) was $195 Mil.
Selling, General & Admin. Expense(SGA) was $632 Mil.
Total Current Liabilities was $694 Mil.
Long-Term Debt was $525 Mil.
Net Income was 39.2 + 35.7 + 19.8 + 24 = $119 Mil.
Non Operating Income was 3.5 + 4.4 + 6.1 + 1.9 = $16 Mil.
Cash Flow from Operations was 89.5 + 79.3 + 113.2 + 78.5 = $361 Mil.
|Accounts Receivable was $345 Mil.
Revenue was 562.3 + 585.8 + 582.6 + 563.83 = $2,295 Mil.
Gross Profit was 298 + 303.9 + 307.2 + 292.608 = $1,202 Mil.
Total Current Assets was $853 Mil.
Total Assets was $3,720 Mil.
Property, Plant and Equipment(Net PPE) was $162 Mil.
Depreciation, Depletion and Amortization(DDA) was $199 Mil.
Selling, General & Admin. Expense(SGA) was $590 Mil.
Total Current Liabilities was $688 Mil.
Long-Term Debt was $609 Mil.
1. DSRI = Days Sales in Receivables Index
A large increase in DSR could be indicative of revenue inflation.
|DSRI||=||(Receivables_t / Revenue_t)||/||(Receivables_t-1 / Revenue_t-1)|
|=||(369.2 / 2336.4)||/||(344.5 / 2294.53)|
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.
|=||(GrossProfit_t-1 / Revenue_t-1)||/||(GrossProfit_t / Revenue_t)|
|=||(1201.708 / 2294.53)||/||(1218.3 / 2336.4)|
3. AQI = Asset Quality Index
AQI is the ratio of asset quality in year t to year t-1.
|AQI||=||(1 - (CurrentAssets_t + PPE_t) / TotalAssets_t)||/||(1 - (CurrentAssets_t-1 + PPE_t-1) / TotalAssets_t-1)|
|=||(1 - (957.9 + 149.4) / 3731.4)||/||(1 - (853 + 162) / 3719.9)|
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.
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))|
|=||(199.004 / (199.004 + 162))||/||(195 / (195 + 149.4))|
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)|
|=||(631.8 / 2336.4)||/||(589.575 / 2294.53)|
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)|
|=||((524.5 + 694) / 3731.4)||/||((609.1 + 687.5) / 3719.9)|
8. TATA = Total Accruals to Total Assets
Total accruals calculated as the change in working capital accounts other than cash less depreciation.
|=||(NetIncome_t - NonOperatingIncome_t||-||CashFlowsfromOperations_t)||/||TotalAssets_t|
|=||(118.7 - 15.9||-||360.5)||/||3731.4|
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.
Trimble Inc has a M-score of -2.74 suggests that the company will not be a manipulator.
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
Trimble Inc Annual Data
Trimble Inc Quarterly Data