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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 -1.73. The lowest was -3.96. And the median was -2.54.
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 * 0.8806||+||0.528 * 0.951||+||0.404 * 1.785||+||0.892 * 1.4134||+||0.115 * 0.8934|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9803||+||4.679 * -0.0167||-||0.327 * 1.0115|
|This Year (Dec14) TTM:||Last Year (Dec13) TTM:|
|Accounts Receivable was $464 Mil.|
Revenue was 1661.4 + 1562.8 + 1485.3 + 1460.5 = $6,170 Mil.
Gross Profit was 386.1 + 390.6 + 387 + 386.5 = $1,550 Mil.
Total Current Assets was $2,730 Mil.
Total Assets was $8,734 Mil.
Property, Plant and Equipment(Net PPE) was $4,903 Mil.
Depreciation, Depletion and Amortization(DDA) was $245 Mil.
Selling, General & Admin. Expense(SGA) was $404 Mil.
Total Current Liabilities was $1,005 Mil.
Long-Term Debt was $3,553 Mil.
Net Income was 138.2 + 149.4 + 164.2 + 226.4 = $678 Mil.
Non Operating Income was 1.8 + 1 + 1.4 + 0.4 = $5 Mil.
Cash Flow from Operations was 486.6 + 175.2 + -47.9 + 205.3 = $819 Mil.
|Accounts Receivable was $373 Mil.
Revenue was 1256 + 1110.3 + 1066.1 + 932.9 = $4,365 Mil.
Gross Profit was 293.3 + 274 + 253.9 + 221.8 = $1,043 Mil.
Total Current Assets was $2,026 Mil.
Total Assets was $7,313 Mil.
Property, Plant and Equipment(Net PPE) was $4,771 Mil.
Depreciation, Depletion and Amortization(DDA) was $212 Mil.
Selling, General & Admin. Expense(SGA) was $291 Mil.
Total Current Liabilities was $784 Mil.
Long-Term Debt was $2,990 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)|
|=||(463.9 / 6170)||/||(372.7 / 4365.3)|
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)|
|=||(390.6 / 4365.3)||/||(386.1 / 6170)|
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 - (2729.9 + 4902.9) / 8733.8)||/||(1 - (2026.3 + 4770.6) / 7313.4)|
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))|
|=||(211.5 / (211.5 + 4770.6))||/||(244.6 / (244.6 + 4902.9))|
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)|
|=||(403.6 / 6170)||/||(291.3 / 4365.3)|
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)|
|=||((3553 + 1005) / 8733.8)||/||((2989.8 + 783.7) / 7313.4)|
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|
|=||(678.2 - 4.6||-||819.2)||/||8733.8|
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 -2.02 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