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GuruFocus has detected 3 Warning Signs with TRC Companies Inc $TRR.
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TRC Companies Inc (NYSE:TRR)
Beneish M-Score
-1.88 (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.

TRC Companies Inc has a M-score of -1.88 signals that the company is a manipulator.

TRR' s Beneish M-Score Range Over the Past 10 Years
Min: -200.48   Max: 4.28
Current: -1.88

-200.48
4.28

During the past 13 years, the highest Beneish M-Score of TRC Companies Inc was 4.28. The lowest was -200.48. And the median was -2.73.


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 TRC Companies 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 * 1.7531+0.528 * 1.0167+0.404 * 0.9886+0.892 * 1.1774+0.115 * 0.7673
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9929+4.679 * -0.0475-0.327 * 1.0161
=-1.88

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

This Year (Mar17) TTM:Last Year (Mar16) TTM:
Accounts Receivable was $191.2 Mil.
Revenue was 129.885 + 128.062 + 124.976 + 146.513 = $529.4 Mil.
Gross Profit was 22.814 + 22.449 + 21.3 + 24.886 = $91.4 Mil.
Total Current Assets was $281.6 Mil.
Total Assets was $520.6 Mil.
Property, Plant and Equipment(Net PPE) was $21.2 Mil.
Depreciation, Depletion and Amortization(DDA) was $18.0 Mil.
Selling, General & Admin. Expense(SGA) was $42.9 Mil.
Total Current Liabilities was $210.9 Mil.
Long-Term Debt was $80.1 Mil.
Net Income was 4.498 + 3.998 + 3.639 + 5.909 = $18.0 Mil.
Non Operating Income was -0.02 + -0.062 + -0.034 + -0.053 = $-0.2 Mil.
Cash Flow from Operations was 7.074 + 21.403 + -3.186 + 17.665 = $43.0 Mil.
Accounts Receivable was $92.6 Mil.
Revenue was 121.426 + 112.44 + 100.92 + 114.892 = $449.7 Mil.
Gross Profit was 17.396 + 18.764 + 17.936 + 24.876 = $79.0 Mil.
Total Current Assets was $243.9 Mil.
Total Assets was $462.3 Mil.
Property, Plant and Equipment(Net PPE) was $22.8 Mil.
Depreciation, Depletion and Amortization(DDA) was $12.4 Mil.
Selling, General & Admin. Expense(SGA) was $36.7 Mil.
Total Current Liabilities was $170.4 Mil.
Long-Term Debt was $83.8 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)
=(191.222 / 529.436) / (92.644 / 449.678)
=0.36118058 / 0.20602298
=1.7531

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)
=(78.972 / 449.678) / (91.449 / 529.436)
=0.175619 / 0.17272909
=1.0167

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 - (281.566 + 21.224) / 520.623) / (1 - (243.852 + 22.758) / 462.259)
=0.41840833 / 0.42324541
=0.9886

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
=529.436 / 449.678
=1.1774

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))
=(12.35 / (12.35 + 22.758)) / (17.966 / (17.966 + 21.224))
=0.35177168 / 0.45843327
=0.7673

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)
=(42.856 / 529.436) / (36.661 / 449.678)
=0.08094652 / 0.08152723
=0.9929

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)
=((80.056 + 210.863) / 520.623) / ((83.756 + 170.449) / 462.259)
=0.55879014 / 0.54991898
=1.0161

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
=(18.044 - -0.169 - 42.956) / 520.623
=-0.0475

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.

TRC Companies Inc has a M-score of -1.88 signals that the company is likely to 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.

TRC Companies Inc Annual Data

Jun07Jun08Jun09Jun10Jun11Jun12Jun13Jun14Jun15Jun16
DSRI 1.02270.85960.49311.65221.00290.42832.15260.93280.62240.9601
GMI 0.40730.73871.21970.71180.87350.93521.06611.06820.87361.1369
AQI 1.0010.86070.88520.91261.01230.97080.90390.85721.04661.3718
SGI 1.07531.08741.63120.52771.02181.23671.07421.14681.1121.1607
DEPI 1.03630.91350.93620.80551.40791.00850.860.82650.99541.0217
SGAI 0.72761.45750.50381.49750.98840.95440.92230.88091.08110.7933
LVGI 1.07421.37960.97550.96661.10470.83270.91730.97161.00681.3548
TATA -0.0132-0.2742-0.1276-0.0995-0.07790.05250.0718-0.0277-0.0347-0.1003
M-score -2.74-4.22-2.82-3.05-2.87-2.53-1.00-2.55-2.95-2.70

TRC Companies Inc Quarterly Data

Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16Dec16Mar17
DSRI 1.07531.00570.62240.9641.00890.60690.96010.99430.94231.7531
GMI 1.03050.940.87360.8690.90441.01121.13691.15961.12461.0167
AQI 0.9560.9331.04660.8221.4281.44421.37181.7030.88270.9886
SGI 1.08151.07851.1121.10971.11431.13981.16071.20871.21151.1774
DEPI 0.92570.94260.99541.23261.37361.17611.02170.77790.64080.7673
SGAI 0.8450.8561.08111.08231.03721.01240.79330.86550.94040.9929
LVGI 0.99470.98451.00681.02981.41611.39941.35481.30770.99871.0161
TATA -0.0408-0.0378-0.0347-0.0622-0.0485-0.106-0.1003-0.0647-0.1079-0.0475
M-score -2.51-2.62-2.95-2.84-2.57-3.14-2.70-2.34-2.86-1.88
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