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TRW Automotive Holdings Corp (NYSE:TRW)
Beneish M-Score
-2.46 (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 -2.46 suggests that the company is not a manipulator.

TRW' s 10-Year Beneish M-Score Range
Min: -3.64   Max: -2.23
Current: -2.46

-3.64
-2.23

During the past 13 years, the highest Beneish M-Score of TRW Automotive Holdings Corp was -2.23. The lowest was -3.64. 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 * 1.0248+0.528 * 0.9339+0.404 * 1.0288+0.892 * 1.0739+0.115 * 1.0673
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9653+4.679 * -0.0117-0.327 * 1.0095
=-2.46

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

This Year (Mar14) TTM:Last Year (Mar13) TTM:
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 $444 Mil.
Selling, General & Admin. Expense(SGA) was $652 Mil.
Total Current Liabilities was $4,616 Mil.
Long-Term Debt was $1,468 Mil.
Net Income was 199 + 363 + 197 + 248 = $1,007 Mil.
Non Operating Income was 10 + -4 + 12 + 8 = $26 Mil.
Cash Flow from Operations was -183 + 886 + 147 + 271 = $1,121 Mil.
Accounts Receivable was $2,666 Mil.
Revenue was 4213 + 4032 + 3965 + 4239 = $16,449 Mil.
Gross Profit was 427 + 425 + 414 + 476 = $1,742 Mil.
Total Current Assets was $5,382 Mil.
Total Assets was $11,453 Mil.
Property, Plant and Equipment(Net PPE) was $2,347 Mil.
Depreciation, Depletion and Amortization(DDA) was $417 Mil.
Selling, General & Admin. Expense(SGA) was $629 Mil.
Total Current Liabilities was $4,547 Mil.
Long-Term Debt was $1,236 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)
=(2934 / 17664) / (2666 / 16449)
=0.16610054 / 0.16207672
=1.0248

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)
=(522 / 16449) / (500 / 17664)
=0.10590309 / 0.11339447
=0.9339

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 - (5246 + 2697) / 11936) / (1 - (5382 + 2347) / 11453)
=0.33453418 / 0.32515498
=1.0288

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
=17664 / 16449
=1.0739

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))
=(417 / (417 + 2347)) / (444 / (444 + 2697))
=0.15086831 / 0.14135626
=1.0673

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)
=(652 / 17664) / (629 / 16449)
=0.03691123 / 0.03823941
=0.9653

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)
=((1468 + 4616) / 11936) / ((1236 + 4547) / 11453)
=0.5097185 / 0.50493321
=1.0095

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
=(1007 - 26 - 1121) / 11936
=-0.0117

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 -2.46 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 1.03841.03961.11.21030.87030.65161.04561.05250.9828
AQI 1.02111.06480.96530.92190.84771.02121.03871.01170.9245
SGI 1.05261.03961.11851.01990.77451.23841.12941.01231.0603
DEPI 0.94591.05081.00890.8631.0640.95841.041.18191.066
SGAI 0.86681.03220.9340.95491.19480.84921.06631.02170.9283
LVGI 1.0020.89770.95131.15211.00240.88820.89590.9421.0512
TATA -0.0287-0.0419-0.0419-0.1687-0.0505-0.02550.0030.0017-0.0149
M-score -2.50-2.55-2.49-3.54-2.52-2.63-2.34-2.41-2.48

TRW Automotive Holdings Corp Quarterly Data

Dec11Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14
DSRI 0.94270.93060.93650.96570.97810.96781.05521.13161.06231.0248
GMI 1.04561.08481.11521.06121.05251.05331.01451.02480.98280.9339
AQI 1.03871.06791.11591.08471.01170.98650.96360.95480.92451.0288
SGI 1.12941.09621.05591.02671.01231.00651.0231.03491.06031.0739
DEPI 1.041.061.03351.13061.18191.11731.15681.10831.0661.0673
SGAI 1.06631.03671.01840.98721.02171.02791.02651.01970.93270.9653
LVGI 0.89590.89680.90570.88150.9420.99241.01641.05581.05121.0095
TATA 0.0030.01320.01230.01120.00070.003-0.00060.0027-0.015-0.0117
M-score -2.34-2.29-2.29-2.31-2.42-2.46-2.41-2.33-2.48-2.46
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