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GuruFocus has detected 3 Warning Signs with Trio-Tech International $TRT.
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Trio-Tech International (AMEX:TRT)
Beneish M-Score
-2.78 (As of Today)

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 -2.78 suggests that the company is not a manipulator.

TRT' s Beneish M-Score Range Over the Past 10 Years
Min: -4.07   Max: 21.1
Current: -2.78

-4.07
21.1

During the past 13 years, the highest Beneish M-Score of Trio-Tech International was 21.10. The lowest was -4.07. And the median was -2.78.


Definition

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 * 0.9512+0.528 * 1.0729+0.404 * 0.9701+0.892 * 1.0909+0.115 * 1.0338
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9207+4.679 * -0.0815-0.327 * 1.0046
=-2.78

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

This Year (Dec16) TTM:Last Year (Dec15) TTM:
Accounts Receivable was $7.58 Mil.
Revenue was 9.104 + 8.971 + 8.815 + 9.355 = $36.25 Mil.
Gross Profit was 2.294 + 2.358 + 2.344 + 2.132 = $9.13 Mil.
Total Current Assets was $15.00 Mil.
Total Assets was $30.70 Mil.
Property, Plant and Equipment(Net PPE) was $10.29 Mil.
Depreciation, Depletion and Amortization(DDA) was $1.82 Mil.
Selling, General & Admin. Expense(SGA) was $7.44 Mil.
Total Current Liabilities was $8.48 Mil.
Long-Term Debt was $1.85 Mil.
Net Income was 0.31 + 0.303 + 0.18 + 0.15 = $0.94 Mil.
Non Operating Income was 0.195 + 0.106 + -0.086 + -0.105 = $0.11 Mil.
Cash Flow from Operations was 1.205 + 2.466 + -0.332 + -0.003 = $3.34 Mil.
Accounts Receivable was $7.30 Mil.
Revenue was 8.354 + 7.93 + 8.399 + 8.543 = $33.23 Mil.
Gross Profit was 2.115 + 2.178 + 2.197 + 2.488 = $8.98 Mil.
Total Current Assets was $14.13 Mil.
Total Assets was $30.49 Mil.
Property, Plant and Equipment(Net PPE) was $10.83 Mil.
Depreciation, Depletion and Amortization(DDA) was $1.99 Mil.
Selling, General & Admin. Expense(SGA) was $7.40 Mil.
Total Current Liabilities was $7.92 Mil.
Long-Term Debt was $2.30 Mil.



1. DSRI = Days Sales in Receivables Index

Measured as the ratio of days’ sales in receivables in year t to year t-1.

A large increase in DSR could be indicative of revenue inflation.

DSRI=(Receivables_t / Revenue_t) / (Receivables_t-1 / Revenue_t-1)
=(7.577 / 36.245) / (7.302 / 33.226)
=0.20904952 / 0.21976765
=0.9512

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.

GMI=GrossMargin_t-1 / GrossMargin_t
=(GrossProfit_t-1 / Revenue_t-1) / (GrossProfit_t / Revenue_t)
=(8.978 / 33.226) / (9.128 / 36.245)
=0.27021008 / 0.25184163
=1.0729

3. AQI = Asset Quality Index

AQI is the ratio of asset quality in year t to year t-1.

Asset quality is measured as the ratio of non-current assets other than plant, property and equipment to total assets.

AQI=(1 - (CurrentAssets_t + PPE_t) / TotalAssets_t) / (1 - (CurrentAssets_t-1 + PPE_t-1) / TotalAssets_t-1)
=(1 - (14.998 + 10.29) / 30.696) / (1 - (14.128 + 10.825) / 30.49)
=0.17617931 / 0.18160052
=0.9701

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.

SGI=Sales_t / Sales_t-1
=Revenue_t / Revenue_t-1
=36.245 / 33.226
=1.0909

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))
=(1.988 / (1.988 + 10.825)) / (1.817 / (1.817 + 10.29))
=0.15515492 / 0.15007847
=1.0338

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)
=(7.436 / 36.245) / (7.404 / 33.226)
=0.20515933 / 0.22283754
=0.9207

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)
=((1.852 + 8.478) / 30.696) / ((2.296 + 7.918) / 30.49)
=0.33652593 / 0.33499508
=1.0046

8. TATA = Total Accruals to Total Assets

Total accruals calculated as the change in working capital accounts other than cash less depreciation.

TATA=(IncomefromContinuingOperations_t - CashFlowsfromOperations_t) / TotalAssets_t
=(NetIncome_t - NonOperatingIncome_t - CashFlowsfromOperations_t) / TotalAssets_t
=(0.943 - 0.11 - 3.336) / 30.696
=-0.0815

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 -2.78 suggests that the company will not be a manipulator.


Related Terms

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


Historical Data

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

Trio-Tech International Annual Data

Jun07Jun08Jun09Jun10Jun11Jun12Jun13Jun14Jun15Jun16
DSRI 0.54150.89011.41131.65140.5831.89720.75540.86580.97571.1038
GMI 1.05371.16450.91241.28110.81181.41680.82660.87350.87011.0334
AQI 1.22664.5832.54240.57161.43790.93151.02681.22270.82850.9342
SGI 1.60660.86450.49471.84690.96230.87521.02151.14140.93571.0154
DEPI 0.71871.1071.02451.61491.01520.88151.04081.12080.95471.0832
SGAI 0.65331.28321.45390.61311.31221.00610.88981.01510.99870.9276
LVGI 0.81161.02840.61972.51220.6751.53950.97740.92450.87421.0075
TATA -0.1466-0.0778-0.1193-0.005-0.15830.0077-0.1315-0.1075-0.1225-0.0082
M-score -2.84-1.58-2.48-1.53-3.51-1.73-3.35-2.92-3.23-2.40

Trio-Tech International Quarterly Data

Sep14Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16Dec16
DSRI 0.79340.87681.03810.97571.00520.91881.10061.10381.00920.9512
GMI 0.90730.84720.85050.87010.83330.90981.01541.03341.0931.0729
AQI 1.16461.1671.02580.82850.79690.80530.8890.93420.95020.9701
SGI 1.09991.01790.98670.93570.96880.96540.97471.01541.05111.0909
DEPI 1.11111.01111.00790.95470.93620.98971.09071.08321.11751.0338
SGAI 1.00841.02941.04581.00020.98210.98890.94210.92620.9110.9207
LVGI 0.91170.90980.87760.87420.93580.91710.99441.00750.95081.0046
TATA -0.0876-0.0916-0.0801-0.1233-0.1309-0.1061-0.0806-0.0082-0.0602-0.0815
M-score -2.93-2.99-2.87-3.24-3.27-3.18-2.80-2.40-2.63-2.78
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