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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 0.18. The lowest was -3.21. And the median was -2.29.
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 * 0.3665||+||0.528 * 1.0371||+||0.404 * 0.9837||+||0.892 * 1.3552||+||0.115 * 0.6919|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.8406||+||4.679 * -0.0428||-||0.327 * 1.028|
|This Year (Mar16) TTM:||Last Year (Mar15) TTM:|
|Accounts Receivable was $2,377 Mil.|
Revenue was 4381.296 + 4297.651 + 4723.637 + 4549.578 = $17,952 Mil.
Gross Profit was 183.444 + 140.858 + 170.628 + 126.518 = $621 Mil.
Total Current Assets was $6,286 Mil.
Total Assets was $13,989 Mil.
Property, Plant and Equipment(Net PPE) was $597 Mil.
Depreciation, Depletion and Amortization(DDA) was $501 Mil.
Selling, General & Admin. Expense(SGA) was $108 Mil.
Total Current Liabilities was $5,260 Mil.
Long-Term Debt was $4,130 Mil.
Net Income was 41.828 + -20.367 + 1.056 + -17.192 = $5 Mil.
Non Operating Income was 0.746 + -38.011 + 7.47 + 10.128 = $-20 Mil.
Cash Flow from Operations was 113.151 + 78.055 + 278.029 + 153.802 = $623 Mil.
|Accounts Receivable was $4,785 Mil.
Revenue was 4506.197 + 4210.468 + 2562.529 + 1968.155 = $13,247 Mil.
Gross Profit was 103.312 + 134.73 + 129.031 + 108.54 = $476 Mil.
Total Current Assets was $5,985 Mil.
Total Assets was $14,016 Mil.
Property, Plant and Equipment(Net PPE) was $793 Mil.
Depreciation, Depletion and Amortization(DDA) was $366 Mil.
Selling, General & Admin. Expense(SGA) was $95 Mil.
Total Current Liabilities was $4,461 Mil.
Long-Term Debt was $4,692 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)|
|=||(2376.5 / 17952.162)||/||(4785.335 / 13247.349)|
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)|
|=||(475.613 / 13247.349)||/||(621.448 / 17952.162)|
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 - (6285.936 + 596.891) / 13989.215)||/||(1 - (5985.183 + 792.558) / 14016.005)|
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))|
|=||(365.696 / (365.696 + 792.558))||/||(501.02 / (501.02 + 596.891))|
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)|
|=||(107.934 / 17952.162)||/||(94.749 / 13247.349)|
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)|
|=||((4130.087 + 5260.488) / 13989.215)||/||((4691.571 + 4461.104) / 14016.005)|
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|
|=||(5.325 - -19.667||-||623.037)||/||13989.215|
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 -2.95 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