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GuruFocus has detected 4 Warning Signs with TRC Companies Inc $TRR.
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TRC Companies Inc (NYSE:TRR)
Beneish M-Score
-2.86 (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.

TRC Companies Inc has a M-score of -2.86 suggests that the company is not a manipulator.

TRR' s Beneish M-Score Range Over the Past 10 Years
Min: -200.48   Max: 4.28
Current: -2.86

-200.48
4.28

During the past 13 years, the highest Beneish M-Score of TRC Companies Inc was 4.28. The lowest was -200.48. And the median was -2.73.


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 TRC Companies 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 * 0.9423+0.528 * 1.1246+0.404 * 0.8827+0.892 * 1.2115+0.115 * 0.6408
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9268+4.679 * -0.1079-0.327 * 0.9987
=-2.86

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

This Year (Dec16) TTM:Last Year (Dec15) TTM:
Accounts Receivable was $174.2 Mil.
Revenue was 128.062 + 124.976 + 146.513 + 121.426 = $521.0 Mil.
Gross Profit was 22.449 + 21.3 + 24.886 + 17.396 = $86.0 Mil.
Total Current Assets was $277.6 Mil.
Total Assets was $495.8 Mil.
Property, Plant and Equipment(Net PPE) was $21.5 Mil.
Depreciation, Depletion and Amortization(DDA) was $18.6 Mil.
Selling, General & Admin. Expense(SGA) was $41.1 Mil.
Total Current Liabilities was $195.9 Mil.
Long-Term Debt was $74.1 Mil.
Net Income was 3.998 + 3.639 + 5.909 + -14.297 = $-0.8 Mil.
Non Operating Income was -0.062 + -0.034 + -0.053 + -0.027 = $-0.2 Mil.
Cash Flow from Operations was 21.403 + -3.186 + 17.665 + 17.039 = $52.9 Mil.
Accounts Receivable was $152.6 Mil.
Revenue was 112.44 + 100.92 + 114.892 + 101.77 = $430.0 Mil.
Gross Profit was 18.764 + 17.936 + 24.876 + 18.284 = $79.9 Mil.
Total Current Assets was $248.6 Mil.
Total Assets was $492.2 Mil.
Property, Plant and Equipment(Net PPE) was $22.4 Mil.
Depreciation, Depletion and Amortization(DDA) was $9.5 Mil.
Selling, General & Admin. Expense(SGA) was $36.6 Mil.
Total Current Liabilities was $171.8 Mil.
Long-Term Debt was $96.6 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)
=(174.215 / 520.977) / (152.608 / 430.022)
=0.33440056 / 0.35488417
=0.9423

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)
=(79.86 / 430.022) / (86.031 / 520.977)
=0.18571143 / 0.16513397
=1.1246

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 - (277.622 + 21.52) / 495.84) / (1 - (248.577 + 22.411) / 492.198)
=0.39669652 / 0.44943295
=0.8827

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
=520.977 / 430.022
=1.2115

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))
=(9.454 / (9.454 + 22.411)) / (18.556 / (18.556 + 21.52))
=0.29668916 / 0.46302026
=0.6408

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)
=(41.089 / 520.977) / (36.594 / 430.022)
=0.07886912 / 0.08509797
=0.9268

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)
=((74.101 + 195.931) / 495.84) / ((96.563 + 171.831) / 492.198)
=0.54459503 / 0.54529681
=0.9987

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
=(-0.751 - -0.176 - 52.921) / 495.84
=-0.1079

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.

TRC Companies Inc has a M-score of -2.86 suggests that the company will not 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 local exchange's currency.

TRC Companies Inc Annual Data

Jun07Jun08Jun09Jun10Jun11Jun12Jun13Jun14Jun15Jun16
DSRI 1.02270.85960.81040.70831.42360.42831.15851.73311.06390.5617
GMI 0.40730.73870.74221.66040.61530.93521.06611.06820.87361.1369
AQI 1.0010.86070.88520.91261.01230.97080.90390.85720.90031.5947
SGI 1.07531.08740.99251.2310.71981.23671.07421.14681.1121.1607
DEPI 1.03630.91350.93620.80551.40791.00850.860.82650.99541.0217
SGAI 0.72761.45750.8280.66911.34610.95440.92230.88091.0710.8008
LVGI 1.07421.37960.97550.96661.10470.83270.91730.97161.00681.3548
TATA -0.0132-0.2742-0.1276-0.0995-0.07790.05250.0718-0.0277-0.0347-0.1003
M-score -2.74-4.22-3.41-2.65-2.95-2.53-1.91-1.82-2.61-2.98

TRC Companies Inc Quarterly Data

Sep14Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16Dec16
DSRI 0.63481.07531.00571.06390.9641.00890.60690.56170.99430.9423
GMI 1.04231.03050.940.87360.8690.90441.01121.13691.15961.1246
AQI 0.91420.9560.9330.90030.8221.4281.44421.59471.7030.8827
SGI 1.10251.08151.07851.1121.10971.11431.13981.16071.20871.2115
DEPI 0.84380.92570.94260.99541.23261.37361.17611.02170.77790.6408
SGAI 0.85050.8450.8561.0711.0981.05241.0270.82120.85310.9268
LVGI 0.95370.99470.98451.00681.02981.41611.39941.35481.30770.9987
TATA -0.0282-0.0409-0.0379-0.0348-0.0622-0.0485-0.106-0.1003-0.0647-0.1079
M-score -2.85-2.51-2.62-2.61-2.85-2.58-3.14-2.98-2.33-2.86
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