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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.
Trio-Tech International has a M-score of -2.76 suggests that the company is not a manipulator.
During the past 13 years, the highest Beneish M-Score of Trio-Tech International was 21.23. The lowest was -3.89. And the median was -2.47.
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 Trio-Tech International 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 * 1.0476||+||0.528 * 0.9769||+||0.404 * 0.9874||+||0.892 * 1.1266||+||0.115 * 1.0302|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9977||+||4.679 * -0.0833||-||0.327 * 1.1018|
|This Year (Mar14) TTM:||Last Year (Mar13) TTM:|
|Accounts Receivable was $9.40 Mil.|
Revenue was 8.039 + 9.339 + 9.497 + 8.516 = $35.39 Mil.
Gross Profit was 1.967 + 1.987 + 2.091 + 1.697 = $7.74 Mil.
Total Current Assets was $14.16 Mil.
Total Assets was $34.20 Mil.
Property, Plant and Equipment(Net PPE) was $13.02 Mil.
Depreciation, Depletion and Amortization(DDA) was $2.41 Mil.
Selling, General & Admin. Expense(SGA) was $7.59 Mil.
Total Current Liabilities was $10.59 Mil.
Long-Term Debt was $2.83 Mil.
Net Income was 0.157 + -0.365 + -0.017 + 0.046 = $-0.18 Mil.
Non Operating Income was 0.068 + -0.206 + 0.161 + 0.105 = $0.13 Mil.
Cash Flow from Operations was 0.953 + 0.988 + 1.213 + -0.612 = $2.54 Mil.
|Accounts Receivable was $7.96 Mil.
Revenue was 6.458 + 7.221 + 9.575 + 8.16 = $31.41 Mil.
Gross Profit was 1.267 + 1.548 + 1.839 + 2.059 = $6.71 Mil.
Total Current Assets was $12.56 Mil.
Total Assets was $32.46 Mil.
Property, Plant and Equipment(Net PPE) was $13.16 Mil.
Depreciation, Depletion and Amortization(DDA) was $2.52 Mil.
Selling, General & Admin. Expense(SGA) was $6.75 Mil.
Total Current Liabilities was $8.38 Mil.
Long-Term Debt was $3.18 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)|
|=||(9.395 / 35.391)||/||(7.96 / 31.414)|
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)|
|=||(1.987 / 31.414)||/||(1.967 / 35.391)|
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 - (14.162 + 13.024) / 34.196)||/||(1 - (12.562 + 13.156) / 32.456)|
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))|
|=||(2.521 / (2.521 + 13.156))||/||(2.409 / (2.409 + 13.024))|
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)|
|=||(7.588 / 35.391)||/||(6.751 / 31.414)|
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)|
|=||((2.83 + 10.588) / 34.196)||/||((3.175 + 8.384) / 32.456)|
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|
|=||(-0.179 - 0.128||-||2.542)||/||34.196|
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.
Trio-Tech International has a M-score of -2.76 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
Trio-Tech International Annual Data
Trio-Tech International Quarterly Data