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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 -2.55 suggests that the company is not a manipulator.
During the past 13 years, the highest Beneish M-Score of TRC Companies Inc was 4.15. The lowest was -5.07. And the median was -2.70.
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 * 0.9328||+||0.528 * 1.0682||+||0.404 * 0.8572||+||0.892 * 1.1468||+||0.115 * 0.8265|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.8809||+||4.679 * -0.0277||-||0.327 * 0.9716|
|This Year (Jun14) TTM:||Last Year (Jun13) TTM:|
|Accounts Receivable was $116.9 Mil.|
Revenue was 94.779 + 93.162 + 91.342 + 93.599 = $372.9 Mil.
Gross Profit was 17.585 + 13.035 + 14.953 + 15.201 = $60.8 Mil.
Total Current Assets was $221.0 Mil.
Total Assets was $335.6 Mil.
Property, Plant and Equipment(Net PPE) was $13.1 Mil.
Depreciation, Depletion and Amortization(DDA) was $8.8 Mil.
Selling, General & Admin. Expense(SGA) was $31.1 Mil.
Total Current Liabilities was $132.2 Mil.
Long-Term Debt was $0.3 Mil.
Net Income was 5.037 + 1.431 + 3.096 + 2.487 = $12.1 Mil.
Non Operating Income was -0.026 + -0.073 + 0.094 + -0.047 = $-0.1 Mil.
Cash Flow from Operations was 18.209 + 8.626 + -6.524 + 1.075 = $21.4 Mil.
|Accounts Receivable was $109.3 Mil.
Revenue was 87.731 + 84.17 + 76.25 + 77.005 = $325.2 Mil.
Gross Profit was 17.882 + 13.724 + 11.686 + 13.319 = $56.6 Mil.
Total Current Assets was $185.4 Mil.
Total Assets was $307.8 Mil.
Property, Plant and Equipment(Net PPE) was $13.8 Mil.
Depreciation, Depletion and Amortization(DDA) was $6.9 Mil.
Selling, General & Admin. Expense(SGA) was $30.7 Mil.
Total Current Liabilities was $123.7 Mil.
Long-Term Debt was $1.4 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)|
|=||(116.937 / 372.882)||/||(109.32 / 325.156)|
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)|
|=||(13.035 / 325.156)||/||(17.585 / 372.882)|
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 - (221.041 + 13.05) / 335.585)||/||(1 - (185.35 + 13.834) / 307.764)|
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))|
|=||(6.903 / (6.903 + 13.834))||/||(8.8 / (8.8 + 13.05))|
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)|
|=||(31.053 / 372.882)||/||(30.739 / 325.156)|
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)|
|=||((0.272 + 132.225) / 335.585)||/||((1.357 + 123.713) / 307.764)|
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|
|=||(12.051 - -0.052||-||21.386)||/||335.585|
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 -2.55 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