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Alcoa Inc (NYSE:AA)
Beneish M-Score
-2.80 (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 -2.80 suggests that the company is not a manipulator.

AA' s Beneish M-Score Range Over the Past 10 Years
Min: -3.09   Max: -2.01
Current: -2.8

-3.09
-2.01

During the past 13 years, the highest Beneish M-Score of Alcoa Inc was -2.01. The lowest was -3.09. And the median was -2.64.


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 * 0.9283+0.528 * 1.0068+0.404 * 1.0753+0.892 * 0.9426+0.115 * 0.9693
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0438+4.679 * -0.0458-0.327 * 1.0249
=-2.80

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

This Year (Dec15) TTM:Last Year (Dec14) TTM:
Accounts Receivable was $1,862 Mil.
Revenue was 5245 + 5573 + 5897 + 5819 = $22,534 Mil.
Gross Profit was 841 + 1014 + 1234 + 1376 = $4,465 Mil.
Total Current Assets was $7,953 Mil.
Total Assets was $36,528 Mil.
Property, Plant and Equipment(Net PPE) was $14,815 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,280 Mil.
Selling, General & Admin. Expense(SGA) was $979 Mil.
Total Current Liabilities was $5,211 Mil.
Long-Term Debt was $9,044 Mil.
Net Income was -701 + 44 + 140 + 195 = $-322 Mil.
Non Operating Income was -34 + 11 + -217 + 9 = $-231 Mil.
Cash Flow from Operations was 865 + 420 + 472 + -175 = $1,582 Mil.
Accounts Receivable was $2,128 Mil.
Revenue was 6377 + 6239 + 5836 + 5454 = $23,906 Mil.
Gross Profit was 1404 + 1335 + 1071 + 959 = $4,769 Mil.
Total Current Assets was $7,848 Mil.
Total Assets was $37,363 Mil.
Property, Plant and Equipment(Net PPE) was $16,426 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,372 Mil.
Selling, General & Admin. Expense(SGA) was $995 Mil.
Total Current Liabilities was $5,458 Mil.
Long-Term Debt was $8,769 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)
=(1862 / 22534) / (2128 / 23906)
=0.08263069 / 0.08901531
=0.9283

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)
=(1014 / 23906) / (841 / 22534)
=0.19948967 / 0.19814503
=1.0068

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 - (7953 + 14815) / 36528) / (1 - (7848 + 16426) / 37363)
=0.37669733 / 0.35031984
=1.0753

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
=22534 / 23906
=0.9426

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))
=(1372 / (1372 + 16426)) / (1280 / (1280 + 14815))
=0.07708731 / 0.0795278
=0.9693

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)
=(979 / 22534) / (995 / 23906)
=0.04344546 / 0.04162135
=1.0438

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)
=((9044 + 5211) / 36528) / ((8769 + 5458) / 37363)
=0.39024858 / 0.38077777
=1.0249

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
=(-322 - -231 - 1582) / 36528
=-0.0458

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 -2.80 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 1.04030.89460.90580.93521.03311.04821.02950.92491.12461.0753
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 -2.49-2.81-2.93-2.36-2.93-2.61-2.39-3.09-2.54-3.06

Alcoa Inc Quarterly Data

Sep13Dec13Mar14Jun14Sep14Dec14Mar15Jun15Sep15Dec15
DSRI 0.89511.07571.26181.05481.70821.12770.67181.04970.61930.9283
GMI 0.76930.85590.87430.86960.90650.81530.76830.77840.86381.0068
AQI 1.03280.92490.9450.90960.82861.12461.1271.18311.25381.0753
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 0.96581.08151.01821.03161.06610.99251.06721.02671.02091.0249
TATA -0.0427-0.1085-0.1032-0.0915-0.0863-0.0331-0.0358-0.0308-0.0394-0.0458
M-score -2.90-3.09-2.86-3.00-2.38-2.52-2.98-2.56-2.97-2.80
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