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Trinity Industries Inc (NYSE:TRN)
Beneish M-Score
-2.17 (As of Today)

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 -2.17 signals that the company is a manipulator.

TRN' s 10-Year Beneish M-Score Range
Min: -3.91   Max: -1.71
Current: -2.17

-3.91
-1.71

During the past 13 years, the highest Beneish M-Score of Trinity Industries Inc was -1.71. The lowest was -3.91. And the median was -2.54.


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 * 0.9668+0.528 * 0.8836+0.404 * 1.0417+0.892 * 1.3772+0.115 * 0.9173
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9431+4.679 * 0.0068-0.327 * 0.953
=-2.17

* 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 $220 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 + 101.1 = $546 Mil.
Accounts Receivable was $386 Mil.
Revenue was 1066.1 + 932.9 + 920.7 + 937.5 = $3,857 Mil.
Gross Profit was 253.9 + 221.8 + 202.7 + 181.9 = $860 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 $197 Mil.
Selling, General & Admin. Expense(SGA) was $255 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 / 3857.2)
=0.09685435 / 0.10017629
=0.9668

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 / 3857.2) / (387 / 5312.1)
=0.22303744 / 0.25240489
=0.8836

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 / 3857.2
=1.3772

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))
=(197.4 / (197.4 + 4584.6)) / (220.1 / (220.1 + 4670.7))
=0.0412798 / 0.04500286
=0.9173

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) / (254.7 / 3857.2)
=0.06227292 / 0.06603236
=0.9431

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 - 546) / 8014.1
=0.0068

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 -2.17 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 0.70480.88440.91020.98621.16520.73671.64691.14750.81530.8345
GMI 1.45080.65760.68730.94830.94871.09390.84971.13950.96540.8349
AQI 0.97310.88250.90380.91370.82350.70310.85591.08970.72480.9111
SGI 1.53411.32021.10921.19071.0130.66320.85011.40471.23961.1452
DEPI 0.85531.32151.40730.9611.21230.89151.14040.99911.02331.0156
SGAI 0.68960.88080.95920.92381.04791.15351.17760.79990.86461.1351
LVGI 1.09361.09451.06180.94031.0410.93051.20260.99270.97440.8994
TATA 0.0316-0.03720.0246-0.0163-0.029-0.1724-0.01550.0068-0.0415-0.0396
M-score -1.89-2.68-2.52-2.43-2.55-3.92-2.31-1.80-2.73-2.80

Trinity Industries Inc Quarterly Data

Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14
DSRI 0.8280.69720.99270.81530.98741.08221.10760.83450.79420.9668
GMI 1.16381.11831.07310.96540.87470.84120.79080.83490.86280.8836
AQI 0.69790.72550.67740.72481.07131.04521.48740.91111.10531.0417
SGI 1.41061.44271.36071.23961.1381.04981.05641.14521.2811.3772
DEPI 0.99050.97920.97851.02331.05441.06871.07391.01560.93250.9173
SGAI 0.80210.8070.85290.86460.98821.09681.11651.13510.99830.9431
LVGI 0.98070.97360.96890.97440.9760.92920.94340.89940.89430.953
TATA -0.0023-0.0158-0.0156-0.0415-0.042-0.0448-0.044-0.0398-0.03210.0068
M-score -2.28-2.45-2.30-2.73-2.59-2.62-2.44-2.80-2.57-2.17
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