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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 4.28. The lowest was -5.04. And the median was -2.72.
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 * 0.9601||+||0.528 * 1.1369||+||0.404 * 1.3718||+||0.892 * 1.1607||+||0.115 * 1.0217|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.8136||+||4.679 * -0.1003||-||0.327 * 1.3548|
|This Year (Jun16) TTM:||Last Year (Jun15) TTM:|
|Accounts Receivable was $90.2 Mil.|
Revenue was 146.513 + 121.426 + 112.44 + 100.92 = $481.3 Mil.
Gross Profit was 24.886 + 17.396 + 18.764 + 17.936 = $79.0 Mil.
Total Current Assets was $248.2 Mil.
Total Assets was $478.5 Mil.
Property, Plant and Equipment(Net PPE) was $22.5 Mil.
Depreciation, Depletion and Amortization(DDA) was $14.7 Mil.
Selling, General & Admin. Expense(SGA) was $35.3 Mil.
Total Current Liabilities was $178.4 Mil.
Long-Term Debt was $79.2 Mil.
Net Income was 5.909 + -14.297 + 3.937 + 4.492 = $0.0 Mil.
Non Operating Income was -0.053 + -0.027 + -0.027 + -0.015 = $-0.1 Mil.
Cash Flow from Operations was 17.665 + 17.039 + -0.952 + 14.388 = $48.1 Mil.
|Accounts Receivable was $80.9 Mil.
Revenue was 114.892 + 101.77 + 100.501 + 97.485 = $414.6 Mil.
Gross Profit was 24.876 + 18.284 + 17.902 + 16.295 = $77.4 Mil.
Total Current Assets was $234.3 Mil.
Total Assets was $362.9 Mil.
Property, Plant and Equipment(Net PPE) was $13.7 Mil.
Depreciation, Depletion and Amortization(DDA) was $9.3 Mil.
Selling, General & Admin. Expense(SGA) was $37.3 Mil.
Total Current Liabilities was $144.2 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)|
|=||(90.194 / 481.299)||/||(80.932 / 414.648)|
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)|
|=||(77.357 / 414.648)||/||(78.982 / 481.299)|
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 - (248.245 + 22.46) / 478.478)||/||(1 - (234.303 + 13.709) / 362.881)|
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))|
|=||(9.316 / (9.316 + 13.709))||/||(14.725 / (14.725 + 22.46))|
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)|
|=||(35.253 / 481.299)||/||(37.331 / 414.648)|
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)|
|=||((79.243 + 178.443) / 478.478)||/||((0.055 + 144.196) / 362.881)|
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|
|=||(0.041 - -0.122||-||48.14)||/||478.478|
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 -2.70 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