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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 -2.39.
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 * 1.0518||+||0.528 * 1.1439||+||0.404 * 0.9841||+||0.892 * 1.0249||+||0.115 * 1.023|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.8112||+||4.679 * -0.0218||-||0.327 * 0.9997|
|This Year (Sep14) TTM:||Last Year (Sep13) TTM:|
|Accounts Receivable was $1,176 Mil.|
Revenue was 2562.529 + 1968.155 + 1872.224 + 1953.875 = $8,357 Mil.
Gross Profit was 129.031 + 108.54 + 87.407 + 78.198 = $403 Mil.
Total Current Assets was $3,434 Mil.
Total Assets was $6,123 Mil.
Property, Plant and Equipment(Net PPE) was $282 Mil.
Depreciation, Depletion and Amortization(DDA) was $95 Mil.
Selling, General & Admin. Expense(SGA) was $81 Mil.
Total Current Liabilities was $2,456 Mil.
Long-Term Debt was $940 Mil.
Net Income was 64.026 + 69.24 + 40.192 + 56.396 = $230 Mil.
Non Operating Income was 1.892 + 1.034 + -0.195 + 0.017 = $3 Mil.
Cash Flow from Operations was 174.916 + 79.713 + -31.391 + 137.387 = $361 Mil.
|Accounts Receivable was $1,091 Mil.
Revenue was 2079.087 + 2067.49 + 1989.646 + 2017.272 = $8,153 Mil.
Gross Profit was 140.213 + 131.814 + 99.843 + 78.118 = $450 Mil.
Total Current Assets was $3,132 Mil.
Total Assets was $5,666 Mil.
Property, Plant and Equipment(Net PPE) was $271 Mil.
Depreciation, Depletion and Amortization(DDA) was $94 Mil.
Selling, General & Admin. Expense(SGA) was $97 Mil.
Total Current Liabilities was $2,054 Mil.
Long-Term Debt was $1,089 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)|
|=||(1176.276 / 8356.783)||/||(1091.162 / 8153.495)|
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)|
|=||(108.54 / 8153.495)||/||(129.031 / 8356.783)|
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 - (3434.113 + 281.979) / 6123.377)||/||(1 - (3131.602 + 270.672) / 5665.623)|
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))|
|=||(94.406 / (94.406 + 270.672))||/||(95.394 / (95.394 + 281.979))|
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)|
|=||(80.908 / 8356.783)||/||(97.318 / 8153.495)|
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)|
|=||((939.565 + 2455.769) / 6123.377)||/||((1089.06 + 2053.549) / 5665.623)|
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|
|=||(229.854 - 2.748||-||360.625)||/||6123.377|
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 -2.41 suggests that the company will not 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