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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.
TRC Companies, Inc. has a M-score of -1.74 signals that the company is a manipulator.
During the past 13 years, the highest Beneish M-Score of TRC Companies, Inc. was 4.21. The lowest was -200.56. 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 * 1.368||+||0.528 * 1.019||+||0.404 * 0.8867||+||0.892 * 1.1598||+||0.115 * 0.8171|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9982||+||4.679 * 0.0624||-||0.327 * 0.9409|
|This Year (Dec13) TTM:||Last Year (Dec12) TTM:|
|Accounts Receivable was $158.4 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.
Net Income was 3.096 + 2.487 + 24.779 + 3.101 = $33.5 Mil.
Non Operating Income was 0.094 + -0.047 + -0.053 + -0.058 = $-0.1 Mil.
Cash Flow from Operations was -6.524 + 1.075 + 10.965 + 7.994 = $13.5 Mil.
|Accounts Receivable was $99.8 Mil.
Revenue was 76.25 + 77.005 + 78.682 + 75.745 = $307.7 Mil.
Gross Profit was 11.686 + 13.319 + 16.421 + 12.835 = $54.3 Mil.
Total Current Assets was $155.7 Mil.
Total Assets was $268.6 Mil.
Property, Plant and Equipment(Net PPE) was $13.1 Mil.
Depreciation, Depletion and Amortization(DDA) was $5.8 Mil.
Selling, General & Admin. Expense(SGA) was $29.5 Mil.
Total Current Liabilities was $108.9 Mil.
Long-Term Debt was $1.6 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)|
|=||(158.403 / 356.842)||/||(99.84 / 307.682)|
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)|
|=||(15.201 / 307.682)||/||(14.953 / 356.842)|
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 - (201.651 + 13.534) / 320.804)||/||(1 - (155.739 + 13.113) / 268.576)|
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))|
|=||(5.843 / (5.843 + 13.113))||/||(8.198 / (8.198 + 13.534))|
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)|
|=||(34.149 / 356.842)||/||(29.499 / 307.682)|
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)|
|=||((0.632 + 123.558) / 320.804)||/||((1.612 + 108.891) / 268.576)|
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|
|=||(33.463 - -0.064||-||13.51)||/||320.804|
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 -1.74 signals that the company is likely to 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