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TRW Automotive Holdings Corp (NYSE:TRW)
Beneish M-Score
-3.06 (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 -3.06 suggests that the company is not a manipulator.

TRW' s 10-Year Beneish M-Score Range
Min: -3.64   Max: -2.19
Current: -3.06

-3.64
-2.19

During the past 13 years, the highest Beneish M-Score of TRW Automotive Holdings Corp was -2.19. The lowest was -3.64. And the median was -2.49.


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 * 0.901+0.528 * 0.954+0.404 * 0.9398+0.892 * 0.9759+0.115 * 0.9059
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 2.2301+4.679 * -0.0464-0.327 * 0.9366
=-3.06

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

This Year (Mar15) TTM:Last Year (Mar14) TTM:
Accounts Receivable was $2,580 Mil.
Revenue was 4142 + 4348 + 4156 + 4593 = $17,239 Mil.
Gross Profit was 483 + 524 + 475 + 567 = $2,049 Mil.
Total Current Assets was $5,294 Mil.
Total Assets was $11,282 Mil.
Property, Plant and Equipment(Net PPE) was $2,441 Mil.
Depreciation, Depletion and Amortization(DDA) was $441 Mil.
Selling, General & Admin. Expense(SGA) was $1,443 Mil.
Total Current Liabilities was $4,101 Mil.
Long-Term Debt was $1,285 Mil.
Net Income was 366 + -360 + 189 + 265 = $460 Mil.
Non Operating Income was 10 + 6 + 12 + 10 = $38 Mil.
Cash Flow from Operations was -192 + 673 + 207 + 257 = $945 Mil.
Accounts Receivable was $2,934 Mil.
Revenue was 4442 + 4496 + 4212 + 4514 = $17,664 Mil.
Gross Profit was 500 + 522 + 450 + 531 = $2,003 Mil.
Total Current Assets was $5,246 Mil.
Total Assets was $11,936 Mil.
Property, Plant and Equipment(Net PPE) was $2,697 Mil.
Depreciation, Depletion and Amortization(DDA) was $434 Mil.
Selling, General & Admin. Expense(SGA) was $663 Mil.
Total Current Liabilities was $4,616 Mil.
Long-Term Debt was $1,468 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)
=(2580 / 17239) / (2934 / 17664)
=0.14966065 / 0.16610054
=0.901

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)
=(524 / 17664) / (483 / 17239)
=0.11339447 / 0.1188584
=0.954

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 - (5294 + 2441) / 11282) / (1 - (5246 + 2697) / 11936)
=0.31439461 / 0.33453418
=0.9398

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
=17239 / 17664
=0.9759

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))
=(434 / (434 + 2697)) / (441 / (441 + 2441))
=0.13861386 / 0.15301874
=0.9059

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)
=(1443 / 17239) / (663 / 17664)
=0.08370555 / 0.03753397
=2.2301

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)
=((1285 + 4101) / 11282) / ((1468 + 4616) / 11936)
=0.47739762 / 0.5097185
=0.9366

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
=(460 - 38 - 945) / 11282
=-0.0464

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 -3.06 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

Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14
DSRI 1.02081.01181.00920.66551.59790.86730.94270.97811.06230.9756
GMI 1.03841.03961.11.21030.87030.65161.04561.05250.98280.9397
AQI 1.02111.06480.96530.92190.84771.02121.03871.01170.92450.9857
SGI 1.05261.03961.11851.01990.77451.23841.12941.01231.06031.006
DEPI 0.94591.05081.00890.8631.0640.95841.05531.18171.07170.9503
SGAI 0.86681.03220.9340.95491.19480.84921.06631.02170.94912.2733
LVGI 1.0020.89770.95131.15211.00240.88820.89590.9421.05120.9803
TATA -0.0287-0.0419-0.0419-0.1687-0.0505-0.02550.0030.0017-0.0149-0.0619
M-score -2.50-2.55-2.49-3.54-2.52-2.63-2.33-2.41-2.48-3.04

TRW Automotive Holdings Corp Quarterly Data

Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14Dec14Mar15
DSRI 0.97810.96781.05521.13161.06231.02481.00770.90960.97560.901
GMI 1.05251.05331.01451.02480.98280.93390.9350.92550.93970.954
AQI 1.01170.98650.96360.95480.92451.02881.00881.02070.98570.9398
SGI 1.01231.00651.0231.03491.06031.07391.06091.04221.0060.9759
DEPI 1.18171.11651.15541.1061.07171.07291.06130.94250.95030.9059
SGAI 1.02171.02791.0331.03110.94910.98161.021.06812.27332.2301
LVGI 0.9420.99241.01641.05581.05121.00950.98280.95110.98030.9366
TATA 0.00070.003-0.00040.0029-0.0149-0.0116-0.0089-0.0149-0.0619-0.0464
M-score -2.42-2.46-2.41-2.33-2.48-2.46-2.48-2.63-3.04-3.06
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