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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 Navigation Ltd 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 Navigation Ltd 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 * 1.063||+||0.528 * 1.0098||+||0.404 * 0.9816||+||0.892 * 0.999||+||0.115 * 0.97|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9883||+||4.679 * -0.0648||-||0.327 * 1.0938|
|This Year (Jun16) TTM:||Last Year (Jun15) TTM:|
|Accounts Receivable was $378 Mil.|
Revenue was 609.6 + 583 + 559.7 + 562.3 = $2,315 Mil.
Gross Profit was 315.6 + 300.6 + 293.1 + 298 = $1,207 Mil.
Total Current Assets was $937 Mil.
Total Assets was $3,752 Mil.
Property, Plant and Equipment(Net PPE) was $152 Mil.
Depreciation, Depletion and Amortization(DDA) was $198 Mil.
Selling, General & Admin. Expense(SGA) was $636 Mil.
Total Current Liabilities was $721 Mil.
Long-Term Debt was $595 Mil.
Net Income was 35.7 + 19.8 + 24 + 37.1 = $117 Mil.
Non Operating Income was 4.4 + 6.1 + 1.9 + 3.9 = $16 Mil.
Cash Flow from Operations was 79.3 + 113.2 + 78.5 + 72.4 = $343 Mil.
|Accounts Receivable was $356 Mil.
Revenue was 585.8 + 582.6 + 563.8 + 584.8 = $2,317 Mil.
Gross Profit was 303.9 + 307.2 + 292.5 + 316.8 = $1,220 Mil.
Total Current Assets was $885 Mil.
Total Assets was $3,780 Mil.
Property, Plant and Equipment(Net PPE) was $162 Mil.
Depreciation, Depletion and Amortization(DDA) was $197 Mil.
Selling, General & Admin. Expense(SGA) was $645 Mil.
Total Current Liabilities was $697 Mil.
Long-Term Debt was $515 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)|
|=||(377.5 / 2314.6)||/||(355.5 / 2317)|
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)|
|=||(1220.4 / 2317)||/||(1207.3 / 2314.6)|
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 - (936.8 + 152) / 3751.6)||/||(1 - (885.1 + 161.7) / 3780.2)|
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))|
|=||(197 / (197 + 161.7))||/||(198.4 / (198.4 + 152))|
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)|
|=||(636.3 / 2314.6)||/||(644.5 / 2317)|
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)|
|=||((594.7 + 721) / 3751.6)||/||((515.4 + 696.6) / 3780.2)|
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|
|=||(116.6 - 16.3||-||343.4)||/||3751.6|
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 Navigation Ltd has a M-score of -2.76 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 Navigation Ltd Annual Data
Trimble Navigation Ltd Quarterly Data