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Beneish M-Score 3.76 higher than -2.22, which implies that it might have manipulated its financial results.
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.
Trinity Industries Inc has a M-score of 3.76 signals that the company is a manipulator.
During the past 13 years, the highest Beneish M-Score of Trinity Industries Inc was 4.11. The lowest was -3.96. And the median was -2.51.
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 Trinity Industries 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 * 0.9824||+||0.528 * 0.8831||+||0.404 * 1.0417||+||0.892 * 1.3554||+||0.115 * 0.0089|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9355||+||4.679 * 1.2972||-||0.327 * 0.953|
|This Year (Jun14) TTM:||Last Year (Jun13) TTM:|
|Accounts Receivable was $515 Mil.|
Revenue was 1485.3 + 1460.5 + 1256 + 1110.3 = $5,312 Mil.
Gross Profit was 387 + 386.5 + 293.3 + 274 = $1,341 Mil.
Total Current Assets was $2,719 Mil.
Total Assets was $8,014 Mil.
Property, Plant and Equipment(Net PPE) was $4,671 Mil.
Depreciation, Depletion and Amortization(DDA) was $-5,939 Mil.
Selling, General & Admin. Expense(SGA) was $331 Mil.
Total Current Liabilities was $811 Mil.
Long-Term Debt was $3,243 Mil.
Net Income was 164.2 + 226.4 + 112.8 + 99.6 = $603 Mil.
Non Operating Income was 1.4 + 0.4 + 0.5 + 0.5 = $3 Mil.
Cash Flow from Operations was -47.9 + 205.3 + 287.5 + -10240.3 = $-9,795 Mil.
|Accounts Receivable was $386 Mil.
Revenue was 1066.1 + 932.9 + 1012.9 + 907.3 = $3,919 Mil.
Gross Profit was 253.9 + 228.5 + 212 + 179.2 = $874 Mil.
Total Current Assets was $1,800 Mil.
Total Assets was $6,901 Mil.
Property, Plant and Equipment(Net PPE) was $4,585 Mil.
Depreciation, Depletion and Amortization(DDA) was $200 Mil.
Selling, General & Admin. Expense(SGA) was $261 Mil.
Total Current Liabilities was $778 Mil.
Long-Term Debt was $2,884 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)|
|=||(514.5 / 5312.1)||/||(386.4 / 3919.2)|
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)|
|=||(386.5 / 3919.2)||/||(387 / 5312.1)|
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 - (2719.3 + 4670.7) / 8014.1)||/||(1 - (1800.2 + 4584.6) / 6900.7)|
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))|
|=||(200.3 / (200.3 + 4584.6))||/||(-5938.5 / (-5938.5 + 4670.7))|
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)|
|=||(330.8 / 5312.1)||/||(260.9 / 3919.2)|
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)|
|=||((3242.5 + 810.5) / 8014.1)||/||((2884.2 + 777.7) / 6900.7)|
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|
|=||(603 - 2.8||-||-9795.4)||/||8014.1|
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.
Trinity Industries Inc has a M-score of 3.76 signals that the company is likely to 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
Trinity Industries Inc Annual Data
Trinity Industries Inc Quarterly Data