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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 * 1.0089||+||0.528 * 0.9044||+||0.404 * 1.428||+||0.892 * 1.1143||+||0.115 * 1.3736|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0524||+||4.679 * -0.0485||-||0.327 * 1.4161|
|This Year (Dec15) TTM:||Last Year (Dec14) TTM:|
|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.
Net Income was 3.937 + 4.492 + 6.763 + 5.165 = $20.4 Mil.
Non Operating Income was -0.027 + -0.015 + -0.03 + -0.023 = $-0.1 Mil.
Cash Flow from Operations was -0.952 + 14.388 + 19.535 + 11.374 = $44.3 Mil.
|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.
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)|
|=||(152.608 / 430.022)||/||(135.754 / 385.927)|
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)|
|=||(17.936 / 385.927)||/||(18.764 / 430.022)|
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 - (248.577 + 22.411) / 492.198)||/||(1 - (220.767 + 13.492) / 341.85)|
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))|
|=||(9.28 / (9.28 + 13.492))||/||(9.454 / (9.454 + 22.411))|
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)|
|=||(36.594 / 430.022)||/||(31.207 / 385.927)|
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)|
|=||((96.563 + 171.831) / 492.198)||/||((0.097 + 131.537) / 341.85)|
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|
|=||(20.357 - -0.095||-||44.345)||/||492.198|
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 -2.58 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