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Trinity Industries Inc (NYSE:TRN)
Beneish M-Score
3.76 (As of Today)

Warning Sign:

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.

TRN' s 10-Year Beneish M-Score Range
Min: -3.96   Max: 4.11
Current: 3.76

-3.96
4.11

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.


Definition

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
=3.76

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.

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

Measured as the ratio of days’ sales in receivables in year t to year t-1.

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)
=0.09685435 / 0.09859155
=0.9824

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.

GMI=GrossMargin_t-1 / GrossMargin_t
=(GrossProfit_t-1 / Revenue_t-1) / (GrossProfit_t / Revenue_t)
=(386.5 / 3919.2) / (387 / 5312.1)
=0.22290263 / 0.25240489
=0.8831

3. AQI = Asset Quality Index

AQI is the ratio of asset quality in year t to year t-1.

Asset quality is measured as the ratio of non-current assets other than plant, property and equipment to total assets.

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)
=0.07787524 / 0.07476053
=1.0417

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.

SGI=Sales_t / Sales_t-1
=Revenue_t / Revenue_t-1
=5312.1 / 3919.2
=1.3554

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))
=0.04186085 / 4.68409844
=0.0089

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)
=0.06227292 / 0.06656971
=0.9355

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)
=0.50573364 / 0.53065631
=0.953

8. TATA = Total Accruals to Total Assets

Total accruals calculated as the change in working capital accounts other than cash less depreciation.

TATA=(IncomefromContinuingOperations_t - CashFlowsfromOperations_t) / TotalAssets_t
=(NetIncome_t - NonOperatingIncome_t - CashFlowsfromOperations_t) / TotalAssets_t
=(603 - 2.8 - -9795.4) / 8014.1
=1.2972

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.


Related Terms

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


Historical Data

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.

Trinity Industries Inc Annual Data

Dec04Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13
DSRI 0.70480.77341.04090.98621.16520.73671.86731.05920.7790.8345
GMI 0.62370.90511.08460.94830.93631.10840.81921.15160.99090.8349
AQI 0.97311.05890.75330.91370.81990.70620.85590.73241.00660.9761
SGI 1.53411.32021.10921.19071.0130.66320.74971.52191.29731.1452
DEPI 0.95641.31651.26320.9611.21230.89151.19280.97591.00151.0156
SGAI 0.68540.88431.03540.92381.04791.15351.18670.77070.89041.1351
LVGI 1.09361.06621.090.94030.98940.9791.20260.99190.97510.8994
TATA 0.032-0.03480.0246-0.0163-0.0279-0.1781-0.01670.0058-0.0415-0.0396
M-score -2.32-2.56-2.29-2.43-2.53-3.95-2.21-1.92-2.59-2.77

Trinity Industries Inc Quarterly Data

Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14
DSRI 0.77040.65040.93870.77230.92651.02051.03230.84170.80710.9824
GMI 1.171.10921.05380.99450.89920.86720.82250.82660.86290.8831
AQI 0.69791.08370.67741.00661.07130.69971.48740.97611.10531.0417
SGI 1.51611.54671.4391.30851.21291.11331.13351.13541.26061.3554
DEPI 0.97910.97450.98091.00151.01221.01220.00880.00850.00940.0089
SGAI 0.76640.77490.81910.89461.04081.1551.18531.12980.98890.9355
LVGI 0.98070.97360.96890.97510.9760.92920.94340.89940.89430.953
TATA -0.0027-0.0147-0.0114-0.0417-0.0418-0.04461.38091.37441.33221.2972
M-score -2.23-2.25-2.26-2.58-2.58-2.764.113.723.703.76
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