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Trinity Industries Inc (NYSE:TRN)
Beneish M-Score
-2.02 (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 -2.02 signals that the company is a manipulator.

TRN' s 10-Year Beneish M-Score Range
Min: -3.96   Max: -1.73
Current: -2.02

-3.96
-1.73

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.


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 * 0.8806+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
=-2.02

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

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

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)
=(463.9 / 6170) / (372.7 / 4365.3)
=0.07518639 / 0.08537787
=0.8806

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)
=(390.6 / 4365.3) / (386.1 / 6170)
=0.23892974 / 0.25124797
=0.951

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 - (2729.9 + 4902.9) / 8733.8) / (1 - (2026.3 + 4770.6) / 7313.4)
=0.12606197 / 0.07062379
=1.785

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
=6170 / 4365.3
=1.4134

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))
=0.04245198 / 0.04751821
=0.8934

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)
=0.06541329 / 0.06673081
=0.9803

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)
=0.52188051 / 0.51597068
=1.0115

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
=(678.2 - 4.6 - 819.2) / 8733.8
=-0.0167

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.


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

Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14
DSRI 0.77341.04090.98621.16520.73671.86731.05920.7790.83450.8806
GMI 0.90511.08460.94830.93631.10840.81921.15160.99090.83490.951
AQI 1.05890.75330.91370.81990.70620.85590.73241.00660.97611.785
SGI 1.32021.10921.19071.0130.66320.74971.52191.29731.14521.4134
DEPI 1.31651.26320.9611.21230.89151.19280.97591.00151.01560.8934
SGAI 0.88431.03540.92381.04791.15351.18670.77070.89041.13510.9803
LVGI 1.06621.090.94030.98940.9791.20260.99190.97510.89941.0115
TATA -0.03480.0246-0.0163-0.0279-0.1781-0.01670.0058-0.0415-0.0396-0.0167
M-score -2.56-2.29-2.43-2.53-3.95-2.21-1.92-2.59-2.77-2.02

Trinity Industries Inc Quarterly Data

Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14Dec14
DSRI 0.94730.7790.93441.0111.02290.83450.80020.98240.79950.8806
GMI 1.04990.99090.9030.87720.83130.83490.85920.87630.92280.951
AQI 0.67741.00661.07131.04521.48740.97611.10531.04171.20531.785
SGI 1.4261.29731.20261.12381.14391.14521.27131.35541.39841.4134
DEPI 0.98091.00151.01221.01221.00381.01560.93930.93020.9380.8934
SGAI 0.81450.89041.03691.16141.1921.13510.99260.93550.9680.9803
LVGI 0.96890.97510.9760.92920.94340.89940.89430.9530.97441.0115
TATA -0.0114-0.0417-0.0418-0.0446-0.0438-0.0396-0.03210.00680.0034-0.0167
M-score -2.27-2.59-2.57-2.62-2.44-2.77-2.57-2.18-2.24-2.02
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