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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 2.29. The lowest was -4.97. And the median was -2.52.
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 * 0.9706||+||0.528 * 1.0241||+||0.404 * 1.0473||+||0.892 * 0.9644||+||0.115 * 1.0048|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.1081||+||4.679 * -0.0764||-||0.327 * 1.0627|
|This Year (Jun15) TTM:||Last Year (Jun14) TTM:|
|Accounts Receivable was $356 Mil.|
Revenue was 585.8 + 582.6 + 563.83 + 584.796 = $2,317 Mil.
Gross Profit was 303.9 + 307.2 + 292.608 + 316.773 = $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.
Net Income was 25.9 + 34.1 + 55.828 + 11.832 = $128 Mil.
Non Operating Income was 6.1 + 11.1 + 3.587 + -0.959 = $20 Mil.
Cash Flow from Operations was 96.8 + 107.2 + 96.619 + 95.864 = $396 Mil.
|Accounts Receivable was $380 Mil.
Revenue was 642.2 + 604.7 + 599.218 + 556.502 = $2,403 Mil.
Gross Profit was 354.6 + 326.9 + 319.454 + 295.053 = $1,296 Mil.
Total Current Assets was $1,042 Mil.
Total Assets was $3,867 Mil.
Property, Plant and Equipment(Net PPE) was $156 Mil.
Depreciation, Depletion and Amortization(DDA) was $192 Mil.
Selling, General & Admin. Expense(SGA) was $603 Mil.
Total Current Liabilities was $572 Mil.
Long-Term Debt was $595 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)|
|=||(355.5 / 2317.026)||/||(379.811 / 2402.62)|
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)|
|=||(307.2 / 2402.62)||/||(303.9 / 2317.026)|
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 - (885.1 + 161.7) / 3780.2)||/||(1 - (1041.704 + 155.575) / 3867.239)|
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))|
|=||(191.628 / (191.628 + 155.575))||/||(197.041 / (197.041 + 161.7))|
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)|
|=||(644.517 / 2317.026)||/||(603.122 / 2402.62)|
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)|
|=||((515.4 + 696.6) / 3780.2)||/||((595.157 + 571.592) / 3867.239)|
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|
|=||(127.66 - 19.828||-||396.483)||/||3780.2|
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 -2.90 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