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Alcoa Inc (NYSE:AA)
Beneish M-Score
-2.59 (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 -2.59 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: -2.59

-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 -2.67.


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 * 1.1828+0.528 * 1.2057+0.404 * 0.9782+0.892 * 0.8655+0.115 * 1.029
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.2733+4.679 * -0.046-0.327 * 1.0013
=-2.59

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

This Year (Jun16) TTM:Last Year (Jun15) TTM:
Accounts Receivable was $1,595 Mil.
Revenue was 5295 + 4947 + 5245 + 5573 = $21,060 Mil.
Gross Profit was 1079 + 906 + 841 + 1014 = $3,840 Mil.
Total Current Assets was $8,093 Mil.
Total Assets was $36,139 Mil.
Property, Plant and Equipment(Net PPE) was $15,017 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,261 Mil.
Selling, General & Admin. Expense(SGA) was $1,069 Mil.
Total Current Liabilities was $5,488 Mil.
Long-Term Debt was $8,278 Mil.
Net Income was 135 + 16 + -701 + 44 = $-506 Mil.
Non Operating Income was 32 + -38 + -34 + 11 = $-29 Mil.
Cash Flow from Operations was 332 + -430 + 865 + 420 = $1,187 Mil.
Accounts Receivable was $1,558 Mil.
Revenue was 5897 + 5819 + 6377 + 6239 = $24,332 Mil.
Gross Profit was 1234 + 1376 + 1404 + 1335 = $5,349 Mil.
Total Current Assets was $7,829 Mil.
Total Assets was $36,587 Mil.
Property, Plant and Equipment(Net PPE) was $15,274 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,323 Mil.
Selling, General & Admin. Expense(SGA) was $970 Mil.
Total Current Liabilities was $5,206 Mil.
Long-Term Debt was $8,713 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)
=(1595 / 21060) / (1558 / 24332)
=0.07573599 / 0.06403091
=1.1828

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)
=(5349 / 24332) / (3840 / 21060)
=0.21983396 / 0.18233618
=1.2057

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 - (8093 + 15017) / 36139) / (1 - (7829 + 15274) / 36587)
=0.36052464 / 0.3685462
=0.9782

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
=21060 / 24332
=0.8655

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))
=(1323 / (1323 + 15274)) / (1261 / (1261 + 15017))
=0.0797132 / 0.07746652
=1.029

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)
=(1069 / 21060) / (970 / 24332)
=0.05075973 / 0.0398652
=1.2733

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)
=((8278 + 5488) / 36139) / ((8713 + 5206) / 36587)
=0.38091812 / 0.38043567
=1.0013

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
=(-506 - -29 - 1187) / 36139
=-0.046

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 -2.59 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 0.8970.92210.82721.18460.89820.84540.93751.33721.12770.9283
GMI 0.81851.09951.20332.10760.45631.01961.28730.85590.81531.0068
AQI 1.04030.89460.90580.93521.03311.04821.02950.92491.12461.0753
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 0.93931.01441.19650.89590.9581.01940.97131.08150.99251.0249
TATA -0.0114-0.0618-0.0439-0.0691-0.051-0.0411-0.0402-0.1084-0.0359-0.0516
M-score -2.49-2.81-2.93-2.36-2.93-2.61-2.60-2.85-2.54-2.82

Alcoa Inc Quarterly Data

Mar14Jun14Sep14Dec14Mar15Jun15Sep15Dec15Mar16Jun16
DSRI 1.26181.05481.70821.12770.67181.04970.61930.92831.19671.1828
GMI 0.87430.86960.90650.81530.76830.77840.86381.00681.15861.2057
AQI 0.9450.90960.82861.12461.1271.18311.25381.07531.0480.9782
SGI 0.96290.9670.99011.03791.07141.07471.02390.94260.89250.8655
DEPI 0.96681.01660.97130.96780.90620.91650.94880.96931.04411.029
SGAI 1.02411.00160.960.9510.93150.91720.98571.04381.13851.2733
LVGI 1.01821.03161.06610.99251.06721.02671.02091.02490.99031.0013
TATA -0.1032-0.0915-0.0863-0.0331-0.0358-0.0366-0.0452-0.0516-0.0488-0.046
M-score -2.86-3.00-2.38-2.52-2.98-2.59-3.00-2.82-2.54-2.59
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