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TRW Automotive Holdings Corp (NYSE:TRW)
Beneish M-Score
-2.63 (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.

TRW Automotive Holdings Corp has a M-score of -2.63 suggests that the company is not a manipulator.

TRW' s 10-Year Beneish M-Score Range
Min: -3.61   Max: -2.18
Current: -2.63

-3.61
-2.18

During the past 13 years, the highest Beneish M-Score of TRW Automotive Holdings Corp was -2.18. The lowest was -3.61. And the median was -2.48.


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 TRW Automotive Holdings Corp 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 * 0.9096+0.528 * 0.9255+0.404 * 1.0207+0.892 * 1.0422+0.115 * 0.9382
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0791+4.679 * -0.0149-0.327 * 0.9511
=-2.63

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.

This Year (Sep14) TTM:Last Year (Sep13) TTM:
Accounts Receivable was $2,841 Mil.
Revenue was 4156 + 4593 + 4442 + 4496 = $17,687 Mil.
Gross Profit was 475 + 567 + 500 + 522 = $2,064 Mil.
Total Current Assets was $5,455 Mil.
Total Assets was $11,986 Mil.
Property, Plant and Equipment(Net PPE) was $2,489 Mil.
Depreciation, Depletion and Amortization(DDA) was $459 Mil.
Selling, General & Admin. Expense(SGA) was $704 Mil.
Total Current Liabilities was $4,325 Mil.
Long-Term Debt was $1,452 Mil.
Net Income was 189 + 265 + 199 + 363 = $1,016 Mil.
Non Operating Income was 12 + 10 + 10 + -4 = $28 Mil.
Cash Flow from Operations was 207 + 257 + -183 + 886 = $1,167 Mil.
Accounts Receivable was $2,997 Mil.
Revenue was 4212 + 4514 + 4213 + 4032 = $16,971 Mil.
Gross Profit was 450 + 531 + 427 + 425 = $1,833 Mil.
Total Current Assets was $5,423 Mil.
Total Assets was $11,826 Mil.
Property, Plant and Equipment(Net PPE) was $2,496 Mil.
Depreciation, Depletion and Amortization(DDA) was $427 Mil.
Selling, General & Admin. Expense(SGA) was $626 Mil.
Total Current Liabilities was $4,683 Mil.
Long-Term Debt was $1,310 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)
=(2841 / 17687) / (2997 / 16971)
=0.16062645 / 0.17659537
=0.9096

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)
=(567 / 16971) / (475 / 17687)
=0.10800778 / 0.11669588
=0.9255

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 - (5455 + 2489) / 11986) / (1 - (5423 + 2496) / 11826)
=0.33722676 / 0.33037375
=1.0207

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
=17687 / 16971
=1.0422

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))
=(427 / (427 + 2496)) / (459 / (459 + 2489))
=0.14608279 / 0.15569878
=0.9382

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)
=(704 / 17687) / (626 / 16971)
=0.03980325 / 0.03688645
=1.0791

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)
=((1452 + 4325) / 11986) / ((1310 + 4683) / 11826)
=0.48197898 / 0.50676476
=0.9511

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
=(1016 - 28 - 1167) / 11986
=-0.0149

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.

TRW Automotive Holdings Corp has a M-score of -2.63 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 own currency.

TRW Automotive Holdings Corp Annual Data

Dec04Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13
DSRI 1.02081.01181.00920.66551.59790.86730.94270.97811.0623
GMI 0.98241.20671.11211.21030.87030.65161.04561.05250.9828
AQI 1.02111.06480.96530.92190.84771.02121.03871.01170.9245
SGI 1.05261.03961.11851.01990.77451.23841.12941.01231.0603
DEPI 0.94591.05081.00290.86821.0640.94371.07181.16481.066
SGAI 0.89181.05220.89570.95491.19480.84921.06631.02170.9283
LVGI 1.0020.89770.95131.15211.00240.88820.89590.9421.0512
TATA -0.0293-0.0427-0.0452-0.1687-0.05-0.02550.0030.0017-0.0149
M-score -2.54-2.47-2.50-3.54-2.52-2.63-2.33-2.41-2.48

TRW Automotive Holdings Corp Quarterly Data

Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14
DSRI 0.93650.96570.97810.96781.05521.13161.06231.02481.00770.9096
GMI 1.11521.06121.05251.05331.01451.02480.98280.93390.9350.9255
AQI 1.11591.08471.01170.98650.96360.95480.92451.02881.00881.0207
SGI 1.05591.02671.01231.00651.0231.03491.06031.07391.06091.0422
DEPI 1.06621.16721.16481.10051.1391.09051.0661.06731.05590.9382
SGAI 1.01840.98721.02171.0231.02161.01490.92830.96991.02091.0791
LVGI 0.90570.88150.9420.99241.01641.05581.05121.00950.98280.9511
TATA 0.01320.01220.00170.0038-0.00060.0027-0.015-0.0117-0.0089-0.0149
M-score -2.28-2.30-2.41-2.45-2.41-2.33-2.48-2.46-2.48-2.63
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