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TRW Automotive Holdings Corp (NYSE:TRW)
Beneish M-Score
-2.47 (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 -2.47 suggests that the company is not a manipulator.

TRW' s 10-Year Beneish M-Score Range
Min: -3.61   Max: -2.22
Current: -2.47

-3.61
-2.22

During the past 13 years, the highest Beneish M-Score of TRW Automotive Holdings Corp was -2.22. The lowest was -3.61. 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 * 0.7648+0.528 * 0.9407+0.404 * 1.0088+0.892 * 1.398+0.115 * 0.9037
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.1305+4.679 * -0.0164-0.327 * 0.9828
=-2.47

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

This Year (Jun14) TTM:Last Year (Jun13) TTM:
Accounts Receivable was $3,078 Mil.
Revenue was 4593 + 4442 + 4496 + 4212 = $17,743 Mil.
Gross Profit was 567 + 500 + 522 + 450 = $2,039 Mil.
Total Current Assets was $5,601 Mil.
Total Assets was $12,433 Mil.
Property, Plant and Equipment(Net PPE) was $2,734 Mil.
Depreciation, Depletion and Amortization(DDA) was $660 Mil.
Selling, General & Admin. Expense(SGA) was $678 Mil.
Total Current Liabilities was $4,757 Mil.
Long-Term Debt was $1,449 Mil.
Net Income was 265 + 199 + 363 + 197 = $1,024 Mil.
Non Operating Income was 10 + 10 + -4 + 12 = $28 Mil.
Cash Flow from Operations was 257 + -183 + 886 + 240 = $1,200 Mil.
Accounts Receivable was $2,879 Mil.
Revenue was 4514 + 4213 + 0 + 3965 = $12,692 Mil.
Gross Profit was 531 + 427 + 0 + 414 = $1,372 Mil.
Total Current Assets was $5,442 Mil.
Total Assets was $11,664 Mil.
Property, Plant and Equipment(Net PPE) was $2,411 Mil.
Depreciation, Depletion and Amortization(DDA) was $514 Mil.
Selling, General & Admin. Expense(SGA) was $429 Mil.
Total Current Liabilities was $4,612 Mil.
Long-Term Debt was $1,312 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)
=(3078 / 17743) / (2879 / 12692)
=0.17347686 / 0.2268358
=0.7648

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)
=(500 / 12692) / (567 / 17743)
=0.10809959 / 0.11491856
=0.9407

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 - (5601 + 2734) / 12433) / (1 - (5442 + 2411) / 11664)
=0.32960669 / 0.32673182
=1.0088

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
=17743 / 12692
=1.398

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))
=(514 / (514 + 2411)) / (660 / (660 + 2734))
=0.1757265 / 0.19446081
=0.9037

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)
=(678 / 17743) / (429 / 12692)
=0.03821225 / 0.03380082
=1.1305

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)
=((1449 + 4757) / 12433) / ((1312 + 4612) / 11664)
=0.49915547 / 0.50788752
=0.9828

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
=(1024 - 28 - 1200) / 12433
=-0.0164

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 -2.47 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 0.94591.05081.00290.86821.0640.94371.07181.18171.0506
SGAI 0.89181.05220.89570.95491.19480.84921.06631.02170.9283
LVGI 1.0020.89770.95131.15211.00240.88820.89590.9421.0512
TATA -0.0293-0.0427-0.0452-0.1687-0.05-0.02550.003-0.0017-0.0149
M-score -2.54-2.47-2.50-3.54-2.52-2.63-2.33-2.43-2.48

TRW Automotive Holdings Corp Quarterly Data

Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14
DSRI 0.93060.93650.96571.2821.39041.48420.77360.7648
GMI 1.08481.11521.06121.05171.00841.01710.93540.9407
AQI 1.06791.11591.08470.98650.96360.95481.02881.0088
SGI 1.09621.05591.02670.75980.77640.78911.42261.398
DEPI 1.09320.89210.96910.80071.15160.84611.05990.9037
SGAI 1.03671.01840.98720.92870.92250.91221.06841.1305
LVGI 0.89680.90570.88150.99241.01641.05581.00950.9828
TATA 0.01320.02460.0233-0.0349-0.049-0.0528-0.0195-0.0164
M-score -2.29-2.25-2.27-2.58-2.53-2.50-2.43-2.47
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