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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 * 0.948||+||0.528 * 0.9939||+||0.404 * 1.0052||+||0.892 * 1.0157||+||0.115 * 1.0145|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0804||+||4.679 * -0.071||-||0.327 * 1.0396|
|This Year (Mar15) TTM:||Last Year (Mar14) TTM:|
|Accounts Receivable was $383 Mil.|
Revenue was 582.6 + 563.83 + 584.796 + 642.199 = $2,373 Mil.
Gross Profit was 307.2 + 292.608 + 316.773 + 354.571 = $1,271 Mil.
Total Current Assets was $917 Mil.
Total Assets was $3,798 Mil.
Property, Plant and Equipment(Net PPE) was $155 Mil.
Depreciation, Depletion and Amortization(DDA) was $193 Mil.
Selling, General & Admin. Expense(SGA) was $641 Mil.
Total Current Liabilities was $698 Mil.
Long-Term Debt was $530 Mil.
Net Income was 34.1 + 55.828 + 11.832 + 77.834 = $180 Mil.
Non Operating Income was 11.1 + 3.587 + -0.959 + 4.798 = $19 Mil.
Cash Flow from Operations was 107.2 + 96.619 + 95.876 + 131.188 = $431 Mil.
|Accounts Receivable was $398 Mil.
Revenue was 604.7 + 599.218 + 556.502 + 576.293 = $2,337 Mil.
Gross Profit was 326.9 + 319.454 + 295.053 + 302.401 = $1,244 Mil.
Total Current Assets was $931 Mil.
Total Assets was $3,778 Mil.
Property, Plant and Equipment(Net PPE) was $150 Mil.
Depreciation, Depletion and Amortization(DDA) was $192 Mil.
Selling, General & Admin. Expense(SGA) was $584 Mil.
Total Current Liabilities was $563 Mil.
Long-Term Debt was $613 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)|
|=||(383 / 2373.425)||/||(397.74 / 2336.713)|
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)|
|=||(292.608 / 2336.713)||/||(307.2 / 2373.425)|
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 - (917 + 155.2) / 3797.7)||/||(1 - (930.871 + 149.609) / 3777.583)|
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))|
|=||(192.152 / (192.152 + 149.609))||/||(192.941 / (192.941 + 155.2))|
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)|
|=||(641.102 / 2373.425)||/||(584.189 / 2336.713)|
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)|
|=||((530.3 + 698.3) / 3797.7)||/||((612.598 + 562.972) / 3777.583)|
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|
|=||(179.594 - 18.526||-||430.883)||/||3797.7|
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 -2.87 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