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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 TRC Companies Inc was 4.15. The lowest was -200.60. And the median was -2.69.
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 * 1.0753||+||0.528 * 1.0305||+||0.404 * 0.956||+||0.892 * 1.0815||+||0.115 * 0.9257|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.845||+||4.679 * -0.0409||-||0.327 * 0.9947|
|This Year (Dec14) TTM:||Last Year (Dec13) TTM:|
|Accounts Receivable was $135.8 Mil.|
Revenue was 100.501 + 97.485 + 94.779 + 93.162 = $385.9 Mil.
Gross Profit was 17.902 + 16.295 + 17.585 + 13.035 = $64.8 Mil.
Total Current Assets was $220.8 Mil.
Total Assets was $341.9 Mil.
Property, Plant and Equipment(Net PPE) was $13.5 Mil.
Depreciation, Depletion and Amortization(DDA) was $9.3 Mil.
Selling, General & Admin. Expense(SGA) was $31.2 Mil.
Total Current Liabilities was $131.5 Mil.
Long-Term Debt was $0.1 Mil.
Net Income was 4.002 + 3.485 + 5.037 + 1.431 = $14.0 Mil.
Non Operating Income was 0 + -0.022 + -0.026 + -0.073 = $-0.1 Mil.
Cash Flow from Operations was -1.292 + 2.498 + 18.209 + 8.626 = $28.0 Mil.
|Accounts Receivable was $116.7 Mil.
Revenue was 91.342 + 93.599 + 87.731 + 84.17 = $356.8 Mil.
Gross Profit was 14.953 + 15.201 + 17.882 + 13.724 = $61.8 Mil.
Total Current Assets was $201.7 Mil.
Total Assets was $320.8 Mil.
Property, Plant and Equipment(Net PPE) was $13.5 Mil.
Depreciation, Depletion and Amortization(DDA) was $8.2 Mil.
Selling, General & Admin. Expense(SGA) was $34.1 Mil.
Total Current Liabilities was $123.6 Mil.
Long-Term Debt was $0.6 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)|
|=||(135.754 / 385.927)||/||(116.732 / 356.842)|
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)|
|=||(16.295 / 356.842)||/||(17.902 / 385.927)|
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 - (220.767 + 13.492) / 341.85)||/||(1 - (201.651 + 13.534) / 320.804)|
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))|
|=||(8.198 / (8.198 + 13.534))||/||(9.28 / (9.28 + 13.492))|
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)|
|=||(31.207 / 385.927)||/||(34.149 / 356.842)|
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)|
|=||((0.097 + 131.537) / 341.85)||/||((0.632 + 123.558) / 320.804)|
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|
|=||(13.955 - -0.121||-||28.041)||/||341.85|
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 -2.51 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
TRC Companies Inc Annual Data
TRC Companies Inc Quarterly Data