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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
-2.68 (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 -2.68 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: -2.68

-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 -2.68.


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 * 0.7792+0.528 * 0.9663+0.404 * 1.5598+0.892 * 1.0118+0.115 * 0.8929
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0397+4.679 * -0.0531-0.327 * 0.8445
=-2.68

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

This Year (Feb17) TTM:Last Year (Feb16) TTM:
Accounts Receivable was $6.74 Mil.
Revenue was 15.39 + 15.043 + 15.242 + 15.504 = $61.18 Mil.
Gross Profit was 2.402 + 2.59 + 2.601 + 2.629 = $10.22 Mil.
Total Current Assets was $13.43 Mil.
Total Assets was $13.54 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 $9.51 Mil.
Total Current Liabilities was $3.89 Mil.
Long-Term Debt was $0.00 Mil.
Net Income was -0.068 + 0.126 + 0.148 + 0.169 = $0.38 Mil.
Non Operating Income was 0.001 + -0.001 + 0.003 + 0.002 = $0.01 Mil.
Cash Flow from Operations was -0.039 + 0.196 + 0.028 + 0.904 = $1.09 Mil.
Accounts Receivable was $8.55 Mil.
Revenue was 15.075 + 15.185 + 15.235 + 14.97 = $60.47 Mil.
Gross Profit was 2.305 + 2.506 + 2.52 + 2.431 = $9.76 Mil.
Total Current Assets was $13.99 Mil.
Total Assets was $14.08 Mil.
Property, Plant and Equipment(Net PPE) was $0.03 Mil.
Depreciation, Depletion and Amortization(DDA) was $0.03 Mil.
Selling, General & Admin. Expense(SGA) was $9.04 Mil.
Total Current Liabilities was $4.79 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)
=(6.742 / 61.179) / (8.551 / 60.465)
=0.11020121 / 0.14142066
=0.7792

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)
=(9.762 / 60.465) / (10.222 / 61.179)
=0.16144877 / 0.16708348
=0.9663

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 - (13.434 + 0.02) / 13.535) / (1 - (13.99 + 0.031) / 14.075)
=0.00598448 / 0.00383659
=1.5598

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
=61.179 / 60.465
=1.0118

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))
=(0.025 / (0.025 + 0.031)) / (0.02 / (0.02 + 0.02))
=0.44642857 / 0.5
=0.8929

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)
=(9.511 / 61.179) / (9.041 / 60.465)
=0.15546184 / 0.14952452
=1.0397

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 + 3.889) / 13.535) / ((0 + 4.789) / 14.075)
=0.28732915 / 0.34024867
=0.8445

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
=(0.375 - 0.005 - 1.089) / 13.535
=-0.0531

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 -2.68 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 0.94440.9630.94081.18481.2870.85131.05480.87150.85940.8281
GMI 1.05481.01191.01431.01540.96731.10731.00640.98121.03010.9938
AQI 0.69341.02090.11520.91523.10190.2762.54670.92220.41290.6864
SGI 1.03281.0410.82750.86341.06461.14930.99331.10281.1591.0626
DEPI 1.02550.739710.88461.46961.19230.74441.41560.87460.7583
SGAI 0.91630.98941.08481.07681.0140.96841.08950.92610.92870.9664
LVGI 0.92090.95680.89061.04781.26571.05761.27230.99431.02870.9307
TATA 0.00810.0052-0.064-0.00960.0596-0.02470.038-0.045-0.0375-0.0586
M-score -2.52-2.45-3.32-2.54-1.08-2.83-1.76-2.70-2.88-2.99

TSR Inc Quarterly Data

Nov14Feb15May15Aug15Nov15Feb16May16Aug16Nov16Feb17
DSRI 0.82950.93620.85941.01980.80030.840.82810.82080.91230.7792
GMI 1.01041.02861.03011.02531.03051.01070.99380.98280.9670.9663
AQI 0.35530.63830.41290.45521.07860.450.68640.71721.55771.5598
SGI 1.13061.13591.1591.1531.11411.08791.06261.03481.02121.0118
DEPI 1.34310.89970.87460.87290.9040.73230.75830.72130.75710.8929
SGAI 0.94080.93690.92870.91340.92990.94970.96641.00081.01841.0397
LVGI 1.08281.02591.02871.00520.99290.98310.93070.91460.87550.8445
TATA -0.10770.0101-0.03750.0728-0.0746-0.0696-0.0586-0.06480.0202-0.0531
M-score -3.26-2.51-2.88-2.19-2.86-3.11-2.99-3.04-2.23-2.68
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