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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.
During the past 13 years, the highest Beneish M-Score of Aecom was 0.17. The lowest was -3.21. And the median was -2.33.
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 Aecom 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 * 1.5451||+||0.528 * 1.2042||+||0.404 * 1.291||+||0.892 * 1.3089||+||0.115 * 1.489|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.7049||+||4.679 * -0.031||-||0.327 * 1.1497|
|This Year (Dec14) TTM:||Last Year (Dec13) TTM:|
|Accounts Receivable was $4,874 Mil.|
Revenue was 4186.035 + 2562.529 + 1968.155 + 1872.224 = $10,589 Mil.
Gross Profit was 164.223 + 129.031 + 108.54 + 87.407 = $489 Mil.
Total Current Assets was $6,101 Mil.
Total Assets was $14,253 Mil.
Property, Plant and Equipment(Net PPE) was $863 Mil.
Depreciation, Depletion and Amortization(DDA) was $175 Mil.
Selling, General & Admin. Expense(SGA) was $91 Mil.
Total Current Liabilities was $4,413 Mil.
Long-Term Debt was $4,775 Mil.
Net Income was -103.503 + 64.026 + 69.24 + 40.192 = $70 Mil.
Non Operating Income was 2.579 + 1.892 + 1.034 + -0.195 = $5 Mil.
Cash Flow from Operations was 282.642 + 174.916 + 79.713 + -31.391 = $506 Mil.
|Accounts Receivable was $2,410 Mil.
Revenue was 1953.875 + 2079.087 + 2067.49 + 1989.646 = $8,090 Mil.
Gross Profit was 78.198 + 140.213 + 131.814 + 99.843 = $450 Mil.
Total Current Assets was $3,249 Mil.
Total Assets was $5,837 Mil.
Property, Plant and Equipment(Net PPE) was $276 Mil.
Depreciation, Depletion and Amortization(DDA) was $93 Mil.
Selling, General & Admin. Expense(SGA) was $99 Mil.
Total Current Liabilities was $2,160 Mil.
Long-Term Debt was $1,113 Mil.
1. DSRI = Days Sales in Receivables Index
A large increase in DSR could be indicative of revenue inflation.
|DSRI||=||(Receivables_t / Revenue_t)||/||(Receivables_t-1 / Revenue_t-1)|
|=||(4873.911 / 10588.943)||/||(2410.041 / 8090.098)|
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.
|=||(GrossProfit_t-1 / Revenue_t-1)||/||(GrossProfit_t / Revenue_t)|
|=||(129.031 / 8090.098)||/||(164.223 / 10588.943)|
3. AQI = Asset Quality Index
AQI is the ratio of asset quality in year t to year t-1.
|AQI||=||(1 - (CurrentAssets_t + PPE_t) / TotalAssets_t)||/||(1 - (CurrentAssets_t-1 + PPE_t-1) / TotalAssets_t-1)|
|=||(1 - (6100.785 + 862.64) / 14253.269)||/||(1 - (3248.847 + 275.897) / 5837.421)|
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.
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))|
|=||(92.702 / (92.702 + 275.897))||/||(175.318 / (175.318 + 862.64))|
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)|
|=||(91.401 / 10588.943)||/||(99.061 / 8090.098)|
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)|
|=||((4775.396 + 4413.077) / 14253.269)||/||((1113.452 + 2159.67) / 5837.421)|
8. TATA = Total Accruals to Total Assets
Total accruals calculated as the change in working capital accounts other than cash less depreciation.
|=||(NetIncome_t - NonOperatingIncome_t||-||CashFlowsfromOperations_t)||/||TotalAssets_t|
|=||(69.955 - 5.31||-||505.88)||/||14253.269|
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.
Aecom has a M-score of -1.56 signals that the company is likely to be a manipulator.
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
Aecom Annual Data
Aecom Quarterly Data