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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 -2.92 suggests that the company is not a manipulator.
During the past 13 years, the highest Beneish M-Score of Trio-Tech International was 19.35. The lowest was -3.51. And the median was -2.49.
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 * 0.8658||+||0.528 * 0.8735||+||0.404 * 1.2227||+||0.892 * 1.1414||+||0.115 * 1.1208|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0154||+||4.679 * -0.1074||-||0.327 * 0.9245|
|This Year (Jun14) TTM:||Last Year (Jun13) TTM:|
|Accounts Receivable was $8.63 Mil.|
Revenue was 9.387 + 8.039 + 9.339 + 9.497 = $36.26 Mil.
Gross Profit was 2.254 + 1.967 + 1.987 + 2.091 = $8.30 Mil.
Total Current Assets was $13.29 Mil.
Total Assets was $34.59 Mil.
Property, Plant and Equipment(Net PPE) was $13.54 Mil.
Depreciation, Depletion and Amortization(DDA) was $2.29 Mil.
Selling, General & Admin. Expense(SGA) was $8.10 Mil.
Total Current Liabilities was $10.72 Mil.
Long-Term Debt was $2.80 Mil.
Net Income was 0.282 + 0.157 + -0.365 + -0.017 = $0.06 Mil.
Non Operating Income was -0.11 + 0.068 + -0.206 + 0.161 = $-0.09 Mil.
Cash Flow from Operations was 0.706 + 0.953 + 0.988 + 1.213 = $3.86 Mil.
|Accounts Receivable was $8.73 Mil.
Revenue was 8.516 + 6.458 + 7.221 + 9.575 = $31.77 Mil.
Gross Profit was 1.697 + 1.267 + 1.548 + 1.839 = $6.35 Mil.
Total Current Assets was $16.58 Mil.
Total Assets was $36.04 Mil.
Property, Plant and Equipment(Net PPE) was $12.85 Mil.
Depreciation, Depletion and Amortization(DDA) was $2.49 Mil.
Selling, General & Admin. Expense(SGA) was $6.99 Mil.
Total Current Liabilities was $12.39 Mil.
Long-Term Debt was $2.84 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)|
|=||(8.625 / 36.262)||/||(8.728 / 31.77)|
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)|
|=||(1.967 / 31.77)||/||(2.254 / 36.262)|
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 - (13.287 + 13.541) / 34.59)||/||(1 - (16.578 + 12.851) / 36.044)|
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))|
|=||(2.491 / (2.491 + 12.851))||/||(2.294 / (2.294 + 13.541))|
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)|
|=||(8.095 / 36.262)||/||(6.985 / 31.77)|
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)|
|=||((2.798 + 10.718) / 34.59)||/||((2.841 + 12.394) / 36.044)|
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|
|=||(0.057 - -0.087||-||3.86)||/||34.59|
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 -2.92 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