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TRW Automotive Holdings Corp (NYSE:TRW)
Beneish M-Score
-2.48 (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 -2.48 suggests that the company is not a manipulator.

TRW' s 10-Year Beneish M-Score Range
Min: -3.64   Max: -2.19
Current: -2.48

-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 -2.48.


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 * 1.0077+0.528 * 0.935+0.404 * 1.0088+0.892 * 1.0609+0.115 * 1.0559
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0096+4.679 * -0.0089-0.327 * 0.9828
=-2.48

* 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 $448 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 + 147 = $1,107 Mil.
Accounts Receivable was $2,879 Mil.
Revenue was 4514 + 4213 + 4032 + 3965 = $16,724 Mil.
Gross Profit was 531 + 427 + 425 + 414 = $1,797 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 $421 Mil.
Selling, General & Admin. Expense(SGA) was $633 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 / 16724)
=0.17347686 / 0.17214781
=1.0077

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 / 16724) / (567 / 17743)
=0.10745037 / 0.11491856
=0.935

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 / 16724
=1.0609

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))
=(421 / (421 + 2411)) / (448 / (448 + 2734))
=0.14865819 / 0.14079195
=1.0559

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) / (633 / 16724)
=0.03821225 / 0.0378498
=1.0096

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 - 1107) / 12433
=-0.0089

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 -2.48 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

Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14
DSRI 0.93060.93650.96570.97810.96781.05521.13161.06231.02481.0077
GMI 1.08481.11521.06121.05251.05331.01451.02480.98280.93390.935
AQI 1.06791.11591.08471.01170.98650.96360.95480.92451.02881.0088
SGI 1.09621.05591.02671.01231.00651.0231.03491.06031.07391.0609
DEPI 1.061.03351.13061.18191.11731.15681.10831.0661.06731.0559
SGAI 1.03671.01840.98721.02171.02791.0331.02620.93870.97121.0096
LVGI 0.89680.90570.88150.9420.99241.01641.05581.05121.00950.9828
TATA 0.01320.01230.01120.00070.003-0.00040.0029-0.0149-0.0116-0.0089
M-score -2.29-2.29-2.31-2.42-2.46-2.41-2.33-2.48-2.46-2.48
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