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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 -2.53.
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 * 1.018||+||0.528 * 1.0351||+||0.404 * 1.0101||+||0.892 * 0.9439||+||0.115 * 1.0053|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9307||+||4.679 * -0.0658||-||0.327 * 1.1076|
|This Year (Sep15) TTM:||Last Year (Sep14) TTM:|
|Accounts Receivable was $345 Mil.|
Revenue was 562.3 + 585.8 + 582.6 + 563.846 = $2,295 Mil.
Gross Profit was 298 + 303.9 + 307.2 + 292.544 = $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.
Net Income was 37.1 + 25.9 + 34.1 + 55.818 = $153 Mil.
Non Operating Income was 3.9 + 6.1 + 11.1 + 3.673 = $25 Mil.
Cash Flow from Operations was 72.4 + 96.8 + 107.2 + 96.583 = $373 Mil.
|Accounts Receivable was $359 Mil.
Revenue was 584.8 + 642.2 + 604.7 + 599.218 = $2,431 Mil.
Gross Profit was 316.8 + 354.6 + 326.9 + 319.454 = $1,318 Mil.
Total Current Assets was $916 Mil.
Total Assets was $3,819 Mil.
Property, Plant and Equipment(Net PPE) was $154 Mil.
Depreciation, Depletion and Amortization(DDA) was $191 Mil.
Selling, General & Admin. Expense(SGA) was $671 Mil.
Total Current Liabilities was $624 Mil.
Long-Term Debt was $578 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)|
|=||(344.5 / 2294.546)||/||(358.504 / 2430.918)|
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)|
|=||(303.9 / 2430.918)||/||(298 / 2294.546)|
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 - (853 + 162) / 3719.9)||/||(1 - (916.041 + 153.823) / 3819.374)|
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))|
|=||(191.134 / (191.134 + 153.823))||/||(198.941 / (198.941 + 162))|
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)|
|=||(589.589 / 2294.546)||/||(671.167 / 2430.918)|
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)|
|=||((609.1 + 687.5) / 3719.9)||/||((577.719 + 624.268) / 3819.374)|
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|
|=||(152.918 - 24.773||-||372.983)||/||3719.9|
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 -2.82 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