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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 -3.95. And the median was -2.53.
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 * 1.0875||+||0.528 * 1.0058||+||0.404 * 0.9377||+||0.892 * 0.7732||+||0.115 * 1.0515|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.2723||+||4.679 * -0.0692||-||0.327 * 0.8844|
* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.
|This Year (Sep16) TTM:||Last Year (Sep15) TTM:|
|Accounts Receivable was $427 Mil.|
Revenue was 1111.7 + 1184.9 + 1187.9 + 1547 = $5,032 Mil.
Gross Profit was 284.4 + 287.2 + 298 + 430.9 = $1,301 Mil.
Total Current Assets was $2,323 Mil.
Total Assets was $9,136 Mil.
Property, Plant and Equipment(Net PPE) was $5,763 Mil.
Depreciation, Depletion and Amortization(DDA) was $279 Mil.
Selling, General & Admin. Expense(SGA) was $443 Mil.
Total Current Liabilities was $689 Mil.
Long-Term Debt was $3,107 Mil.
Net Income was 84.2 + 94.6 + 97.2 + 200 = $476 Mil.
Non Operating Income was -0.2 + 4.9 + 0.7 + 1.6 = $7 Mil.
Cash Flow from Operations was 305.7 + 200.3 + 286.1 + 309.4 = $1,102 Mil.
|Accounts Receivable was $508 Mil.
Revenue was 1542.2 + 1676.8 + 1626.7 + 1661.4 = $6,507 Mil.
Gross Profit was 432.8 + 457.2 + 415.6 + 386.1 = $1,692 Mil.
Total Current Assets was $2,418 Mil.
Total Assets was $8,805 Mil.
Property, Plant and Equipment(Net PPE) was $5,308 Mil.
Depreciation, Depletion and Amortization(DDA) was $271 Mil.
Selling, General & Admin. Expense(SGA) was $450 Mil.
Total Current Liabilities was $852 Mil.
Long-Term Debt was $3,285 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)|
|=||(427.1 / 5031.5)||/||(507.9 / 6507.1)|
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)|
|=||(1691.7 / 6507.1)||/||(1300.5 / 5031.5)|
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 - (2323.1 + 5763.2) / 9135.6)||/||(1 - (2418.4 + 5308.4) / 8805.3)|
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))|
|=||(271 / (271 + 5308.4))||/||(279.1 / (279.1 + 5763.2))|
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)|
|=||(442.6 / 5031.5)||/||(449.9 / 6507.1)|
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)|
|=||((3107.1 + 688.7) / 9135.6)||/||((3284.5 + 852.1) / 8805.3)|
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|
|=||(476 - 7||-||1101.5)||/||9135.6|
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 -2.95 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
Trinity Industries Inc Annual Data
Trinity Industries Inc Quarterly Data