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GuruFocus has detected 2 Warning Signs with TSR Inc $TSRI.
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TSR Inc (NAS:TSRI)
Beneish M-Score
-2.23 (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.

TSR Inc has a M-score of -2.23 suggests that the company is not a manipulator.

TSRI' s Beneish M-Score Range Over the Past 10 Years
Min: -10000000   Max: 0.69
Current: -2.23

-10000000
0.69

During the past 13 years, the highest Beneish M-Score of TSR Inc was 0.69. The lowest was -10000000.00. And the median was -2.61.


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 TSR Inc 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 * 0.9123+0.528 * 0.967+0.404 * 1.5577+0.892 * 1.0212+0.115 * 0.7571
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0184+4.679 * 0.0202-0.327 * 0.8755
=-2.23

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

This Year (Nov16) TTM:Last Year (Nov15) TTM:
Accounts Receivable was $7.07 Mil.
Revenue was 15.043 + 15.242 + 15.504 + 15.075 = $60.86 Mil.
Gross Profit was 2.59 + 2.601 + 2.629 + 2.305 = $10.13 Mil.
Total Current Assets was $13.71 Mil.
Total Assets was $13.83 Mil.
Property, Plant and Equipment(Net PPE) was $0.02 Mil.
Depreciation, Depletion and Amortization(DDA) was $0.02 Mil.
Selling, General & Admin. Expense(SGA) was $9.31 Mil.
Total Current Liabilities was $4.12 Mil.
Long-Term Debt was $0.00 Mil.
Net Income was 0.126 + 0.148 + 0.169 + -0.024 = $0.42 Mil.
Non Operating Income was -0.001 + 0.003 + 0.002 + -0.004 = $0.00 Mil.
Cash Flow from Operations was 0.196 + 0.028 + 0.904 + -0.988 = $0.14 Mil.
Accounts Receivable was $7.59 Mil.
Revenue was 15.185 + 15.235 + 14.97 + 14.213 = $59.60 Mil.
Gross Profit was 2.506 + 2.52 + 2.431 + 2.131 = $9.59 Mil.
Total Current Assets was $14.12 Mil.
Total Assets was $14.22 Mil.
Property, Plant and Equipment(Net PPE) was $0.04 Mil.
Depreciation, Depletion and Amortization(DDA) was $0.02 Mil.
Selling, General & Admin. Expense(SGA) was $8.95 Mil.
Total Current Liabilities was $4.84 Mil.
Long-Term Debt was $0.00 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)
=(7.066 / 60.864) / (7.585 / 59.603)
=0.1160949 / 0.1272587
=0.9123

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)
=(9.588 / 59.603) / (10.125 / 60.864)
=0.16086439 / 0.1663545
=0.967

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 - (13.714 + 0.02) / 13.831) / (1 - (14.116 + 0.035) / 14.215)
=0.00701323 / 0.00450229
=1.5577

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
=60.864 / 59.603
=1.0212

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))
=(0.023 / (0.023 + 0.035)) / (0.022 / (0.022 + 0.02))
=0.39655172 / 0.52380952
=0.7571

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)
=(9.309 / 60.864) / (8.951 / 59.603)
=0.15294756 / 0.150177
=1.0184

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)
=((0 + 4.123) / 13.831) / ((0 + 4.84) / 14.215)
=0.29809847 / 0.3404854
=0.8755

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
=(0.419 - 0 - 0.14) / 13.831
=0.0202

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.

TSR Inc has a M-score of -2.23 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 local exchange's currency.

TSR Inc Annual Data

May07May08May09May10May11May12May13May14May15May16
DSRI 0.94440.9630.94081.18471.2870.85131.05480.87150.85940.8281
GMI 1.05471.01191.01441.01560.9671.10721.00670.98111.02990.9939
AQI 0.69341.02090.11520.91523.10190.2762.54670.92220.41290.6864
SGI 1.03281.04090.82750.86341.06461.14930.99331.10281.1591.0626
DEPI 1.02020.70721.02130.91671.63641.03330.77961.29310.9440.7517
SGAI 0.91620.98951.08481.07671.0140.96841.08950.92610.92870.9663
LVGI 0.92090.95680.89061.04781.26571.05761.27230.99431.02870.9307
TATA 0.00810.0052-0.0651-0.00960.0596-0.02470.038-0.0451-0.0375-0.0587
M-score -2.52-2.46-3.32-2.54-1.06-2.84-1.76-2.71-2.87-2.99

TSR Inc Quarterly Data

Aug14Nov14Feb15May15Aug15Nov15Feb16May16Aug16Nov16
DSRI 0.75770.82950.93620.85941.01980.80030.840.82810.82080.9123
GMI 1.00431.01041.02861.03011.02531.03051.01070.99380.98280.967
AQI 0.34860.35530.63830.41290.45521.07860.450.68640.71721.5577
SGI 1.11851.13061.13591.1591.1531.11411.08791.06261.03481.0212
DEPI 1.37651.34310.89970.87460.87290.9040.73230.75830.72130.7571
SGAI 0.92510.94080.93690.92870.91340.92990.94970.96641.00081.0184
LVGI 1.06071.08281.02591.02871.00520.99290.98310.93070.91460.8755
TATA -0.1578-0.10770.0101-0.03750.0728-0.0746-0.0696-0.0586-0.06480.0202
M-score -3.56-3.26-2.51-2.88-2.19-2.86-3.11-2.99-3.04-2.23
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