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Alcoa Inc (NYSE:AA)
Beneish M-Score
-2.98 (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.

Alcoa Inc has a M-score of -2.97 suggests that the company is not a manipulator.

AA' s Beneish M-Score Range Over the Past 10 Years
Min: -3.25   Max: -2.01
Current: -2.98

-3.25
-2.01

During the past 13 years, the highest Beneish M-Score of Alcoa Inc was -2.01. The lowest was -3.25. And the median was -2.65.


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 Alcoa 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 * 0.6193+0.528 * 0.8638+0.404 * 1.2538+0.892 * 1.0239+0.115 * 0.9488
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9857+4.679 * -0.0394-0.327 * 1.0209
=-2.97

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

This Year (Sep15) TTM:Last Year (Sep14) TTM:
Accounts Receivable was $1,525 Mil.
Revenue was 5573 + 5897 + 5819 + 6377 = $23,666 Mil.
Gross Profit was 1014 + 1234 + 1376 + 1404 = $5,028 Mil.
Total Current Assets was $8,592 Mil.
Total Assets was $36,587 Mil.
Property, Plant and Equipment(Net PPE) was $14,752 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,295 Mil.
Selling, General & Admin. Expense(SGA) was $988 Mil.
Total Current Liabilities was $5,147 Mil.
Long-Term Debt was $9,091 Mil.
Net Income was 44 + 140 + 195 + 159 = $538 Mil.
Non Operating Income was 11 + -217 + 9 + 0 = $-197 Mil.
Cash Flow from Operations was 420 + 472 + -175 + 1458 = $2,175 Mil.
Accounts Receivable was $2,405 Mil.
Revenue was 6239 + 5836 + 5454 + 5585 = $23,114 Mil.
Gross Profit was 1335 + 1071 + 959 + 877 = $4,242 Mil.
Total Current Assets was $9,689 Mil.
Total Assets was $37,122 Mil.
Property, Plant and Equipment(Net PPE) was $16,716 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,386 Mil.
Selling, General & Admin. Expense(SGA) was $979 Mil.
Total Current Liabilities was $5,354 Mil.
Long-Term Debt was $8,797 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)
=(1525 / 23666) / (2405 / 23114)
=0.06443843 / 0.10404949
=0.6193

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)
=(1234 / 23114) / (1014 / 23666)
=0.18352514 / 0.21245669
=0.8638

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 - (8592 + 14752) / 36587) / (1 - (9689 + 16716) / 37122)
=0.36195917 / 0.28869673
=1.2538

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
=23666 / 23114
=1.0239

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))
=(1386 / (1386 + 16716)) / (1295 / (1295 + 14752))
=0.07656613 / 0.08070044
=0.9488

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)
=(988 / 23666) / (979 / 23114)
=0.04174765 / 0.04235528
=0.9857

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)
=((9091 + 5147) / 36587) / ((8797 + 5354) / 37122)
=0.38915462 / 0.38120252
=1.0209

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
=(538 - -197 - 2175) / 36587
=-0.0394

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.

Alcoa Inc has a M-score of -2.97 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.

Alcoa Inc Annual Data

Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15
DSRI 0.8970.92210.82721.18460.89820.84541.16541.07571.12770.668
GMI 0.81851.09951.20332.10760.45631.01961.28730.85590.81531.0068
AQI 1.04030.89460.90580.93521.03311.04821.02950.92491.09051.1177
SGI 1.18821.01210.87490.68541.13961.18740.94990.97181.03790.9426
DEPI 1.08641.19741.0591.06470.92370.94130.99570.96020.96780.9693
SGAI 0.91121.03730.90621.26140.83580.91.0221.04040.9511.0438
LVGI 0.93931.01441.19650.89590.9581.01940.97131.08150.99741.013
TATA -0.0006-0.0518-0.0346-0.0691-0.051-0.0416-0.0402-0.1084-0.0358-0.0186
M-score -2.44-2.76-2.88-2.36-2.93-2.62-2.39-3.09-2.55-2.89

Alcoa Inc Quarterly Data

Sep13Dec13Mar14Jun14Sep14Dec14Mar15Jun15Sep15Dec15
DSRI 0.89511.07571.26181.05481.70821.12770.67181.04970.61930.668
GMI 0.76930.85590.87430.86960.90650.81530.76830.77840.86381.0068
AQI 1.03280.92490.9450.90960.82861.09051.1271.18311.25381.1177
SGI 0.98130.97180.96290.9670.99011.03791.07141.07471.02390.9426
DEPI 0.97050.96020.96681.01660.97130.96780.90620.91650.94880.9693
SGAI 1.06241.04041.02411.00160.960.9510.93150.91720.98571.0438
LVGI 0.96581.08151.01821.03161.06610.99741.06721.02671.02091.013
TATA -0.0427-0.1085-0.1032-0.0915-0.0863-0.033-0.0358-0.0308-0.0394-0.0128
M-score -2.90-3.09-2.86-3.00-2.38-2.54-2.98-2.56-2.97-2.86
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