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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 -3.93. 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 * 1.0246||+||0.528 * 0.9526||+||0.404 * 0.7818||+||0.892 * 0.8367||+||0.115 * 1.0313|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.2789||+||4.679 * -0.0616||-||0.327 * 0.8786|
|This Year (Jun16) TTM:||Last Year (Jun15) TTM:|
|Accounts Receivable was $508 Mil.|
Revenue was 1184.9 + 1187.9 + 1547 + 1542.2 = $5,462 Mil.
Gross Profit was 287.2 + 298 + 430.9 + 432.8 = $1,449 Mil.
Total Current Assets was $2,388 Mil.
Total Assets was $9,035 Mil.
Property, Plant and Equipment(Net PPE) was $5,607 Mil.
Depreciation, Depletion and Amortization(DDA) was $276 Mil.
Selling, General & Admin. Expense(SGA) was $467 Mil.
Total Current Liabilities was $681 Mil.
Long-Term Debt was $3,130 Mil.
Net Income was 94.6 + 97.2 + 200 + 204.3 = $596 Mil.
Non Operating Income was 4.9 + 0.7 + 1.6 + 1 = $8 Mil.
Cash Flow from Operations was 200.3 + 286.1 + 309.4 + 348.3 = $1,144 Mil.
|Accounts Receivable was $593 Mil.
Revenue was 1676.8 + 1626.7 + 1661.4 + 1562.8 = $6,528 Mil.
Gross Profit was 457.2 + 415.6 + 386.1 + 390.6 = $1,650 Mil.
Total Current Assets was $2,167 Mil.
Total Assets was $8,632 Mil.
Property, Plant and Equipment(Net PPE) was $5,194 Mil.
Depreciation, Depletion and Amortization(DDA) was $264 Mil.
Selling, General & Admin. Expense(SGA) was $436 Mil.
Total Current Liabilities was $803 Mil.
Long-Term Debt was $3,340 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)|
|=||(508.2 / 5462)||/||(592.8 / 6527.7)|
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)|
|=||(1649.5 / 6527.7)||/||(1448.9 / 5462)|
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 - (2388.1 + 5606.6) / 9035.4)||/||(1 - (2166.5 + 5193.9) / 8632.2)|
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))|
|=||(264 / (264 + 5193.9))||/||(275.9 / (275.9 + 5606.6))|
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)|
|=||(466.9 / 5462)||/||(436.3 / 6527.7)|
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)|
|=||((3129.6 + 680.5) / 9035.4)||/||((3340.3 + 802.9) / 8632.2)|
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|
|=||(596.1 - 8.2||-||1144.1)||/||9035.4|
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 -3.01 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