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Alcoa Inc (NYSE:AA)
Beneish M-Score
-2.51 (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 -2.51 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: -2.51

-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 -2.68.


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 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 * 1.1967+0.528 * 1.1586+0.404 * 1.048+0.892 * 0.8925+0.115 * 1.0441
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.1385+4.679 * -0.0429-0.327 * 0.9903
=-2.51

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

This Year (Mar16) TTM:Last Year (Mar15) TTM:
Accounts Receivable was $1,569 Mil.
Revenue was 4947 + 5245 + 5573 + 5897 = $21,662 Mil.
Gross Profit was 906 + 841 + 1014 + 1234 = $3,995 Mil.
Total Current Assets was $7,665 Mil.
Total Assets was $36,140 Mil.
Property, Plant and Equipment(Net PPE) was $15,016 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,268 Mil.
Selling, General & Admin. Expense(SGA) was $1,007 Mil.
Total Current Liabilities was $5,555 Mil.
Long-Term Debt was $8,257 Mil.
Net Income was 16 + -701 + 44 + 140 = $-501 Mil.
Non Operating Income was -38 + -34 + 11 + -217 = $-278 Mil.
Cash Flow from Operations was -430 + 865 + 420 + 472 = $1,327 Mil.
Accounts Receivable was $1,469 Mil.
Revenue was 5819 + 6377 + 6239 + 5836 = $24,271 Mil.
Gross Profit was 1376 + 1404 + 1335 + 1071 = $5,186 Mil.
Total Current Assets was $7,722 Mil.
Total Assets was $35,694 Mil.
Property, Plant and Equipment(Net PPE) was $15,288 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,353 Mil.
Selling, General & Admin. Expense(SGA) was $991 Mil.
Total Current Liabilities was $5,064 Mil.
Long-Term Debt was $8,711 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)
=(1569 / 21662) / (1469 / 24271)
=0.07243099 / 0.06052491
=1.1967

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)
=(5186 / 24271) / (3995 / 21662)
=0.21367064 / 0.18442434
=1.1586

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 - (7665 + 15016) / 36140) / (1 - (7722 + 15288) / 35694)
=0.37241284 / 0.35535384
=1.048

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
=21662 / 24271
=0.8925

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))
=(1353 / (1353 + 15288)) / (1268 / (1268 + 15016))
=0.08130521 / 0.07786785
=1.0441

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)
=(1007 / 21662) / (991 / 24271)
=0.04648694 / 0.04083062
=1.1385

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)
=((8257 + 5555) / 36140) / ((8711 + 5064) / 35694)
=0.38218041 / 0.3859192
=0.9903

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
=(-501 - -278 - 1327) / 36140
=-0.0429

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 -2.51 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 0.91770.92210.82721.18460.89820.84541.16541.07571.12770.668
GMI 0.81281.09951.20332.10760.45631.01961.32140.83380.81531.0068
AQI 1.04030.89460.90580.93521.03311.04821.02950.92491.12461.0753
SGI 1.16131.01210.87490.68541.13961.18740.94990.97181.03790.9426
DEPI 1.09351.19741.0591.06470.92370.94130.99570.96020.96780.9693
SGAI 0.89291.03730.90621.26140.83580.91.0221.04040.9511.0438
LVGI 0.93931.01441.19650.89590.9581.01940.97131.08150.99251.0249
TATA -0.0114-0.0618-0.0439-0.0771-0.0632-0.0411-0.041-0.1084-0.0359-0.0516
M-score -2.50-2.81-2.93-2.40-2.99-2.61-2.38-3.10-2.54-3.06

Alcoa Inc Quarterly Data

Dec13Mar14Jun14Sep14Dec14Mar15Jun15Sep15Dec15Mar16
DSRI 1.07571.26181.05481.70821.12770.67181.04970.61930.92831.1967
GMI 0.85590.87430.86960.90650.81530.76830.77840.86381.00681.1586
AQI 0.92490.9450.90960.82861.12461.1271.18311.25381.07531.048
SGI 0.97180.96290.9670.99011.03791.07141.07471.02390.94260.8925
DEPI 0.96020.96681.01660.97130.96780.90620.91650.94880.96931.0441
SGAI 1.04041.02411.00160.960.9510.93150.91720.98571.04381.1385
LVGI 1.08151.01821.03161.06610.99251.06721.02671.02091.02490.9903
TATA -0.1085-0.1032-0.0915-0.0863-0.0331-0.0358-0.0308-0.0394-0.0458-0.0429
M-score -3.09-2.86-3.00-2.38-2.52-2.98-2.56-2.97-2.80-2.51
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