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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 Trinity Industries Inc was -1.30. 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 * 0.9985||+||0.528 * 0.9903||+||0.404 * 1.5302||+||0.892 * 1.295||+||0.115 * 0.9558|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.056||+||4.679 * -0.0112||-||0.327 * 1.0024|
|This Year (Mar15) TTM:||Last Year (Mar14) TTM:|
|Accounts Receivable was $545 Mil.|
Revenue was 1626.7 + 1661.4 + 1562.8 + 1485.3 = $6,336 Mil.
Gross Profit was 415.6 + 386.1 + 390.6 + 387 = $1,579 Mil.
Total Current Assets was $2,492 Mil.
Total Assets was $8,722 Mil.
Property, Plant and Equipment(Net PPE) was $5,149 Mil.
Depreciation, Depletion and Amortization(DDA) was $253 Mil.
Selling, General & Admin. Expense(SGA) was $418 Mil.
Total Current Liabilities was $912 Mil.
Long-Term Debt was $3,486 Mil.
Net Income was 180.2 + 138.2 + 149.4 + 164.2 = $632 Mil.
Non Operating Income was 2.3 + 1.8 + 1 + 1.4 = $7 Mil.
Cash Flow from Operations was 109.4 + 486.6 + 175.2 + -47.9 = $723 Mil.
|Accounts Receivable was $421 Mil.
Revenue was 1460.5 + 1256 + 1110.3 + 1066.1 = $4,893 Mil.
Gross Profit was 386.5 + 293.3 + 274 + 253.9 = $1,208 Mil.
Total Current Assets was $2,345 Mil.
Total Assets was $7,580 Mil.
Property, Plant and Equipment(Net PPE) was $4,621 Mil.
Depreciation, Depletion and Amortization(DDA) was $217 Mil.
Selling, General & Admin. Expense(SGA) was $306 Mil.
Total Current Liabilities was $873 Mil.
Long-Term Debt was $2,940 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)|
|=||(544.9 / 6336.2)||/||(421.4 / 4892.9)|
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)|
|=||(386.1 / 4892.9)||/||(415.6 / 6336.2)|
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 - (2492 + 5148.9) / 8722.4)||/||(1 - (2345.4 + 4620.6) / 7580.2)|
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))|
|=||(216.8 / (216.8 + 4620.6))||/||(253.3 / (253.3 + 5148.9))|
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)|
|=||(418.3 / 6336.2)||/||(305.9 / 4892.9)|
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)|
|=||((3485.9 + 911.9) / 8722.4)||/||((2940.2 + 872.5) / 7580.2)|
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|
|=||(632 - 6.5||-||723.3)||/||8722.4|
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 -2.08 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