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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 * 0.4097||+||0.528 * 0.8336||+||0.404 * 1.0009||+||0.892 * 1.1253||+||0.115 * 0.9106|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9594||+||4.679 * -0.044||-||0.327 * 1.0102|
* 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 $2,298 Mil.|
Revenue was 4408.782 + 4381.296 + 4297.651 + 4723.637 = $17,811 Mil.
Gross Profit was 171.343 + 183.444 + 140.858 + 170.628 = $666 Mil.
Total Current Assets was $6,172 Mil.
Total Assets was $13,878 Mil.
Property, Plant and Equipment(Net PPE) was $625 Mil.
Depreciation, Depletion and Amortization(DDA) was $464 Mil.
Selling, General & Admin. Expense(SGA) was $112 Mil.
Total Current Liabilities was $5,286 Mil.
Long-Term Debt was $3,941 Mil.
Net Income was 67.444 + 41.828 + -20.367 + 1.056 = $90 Mil.
Non Operating Income was 1.498 + 0.746 + -38.011 + 7.47 = $-28 Mil.
Cash Flow from Operations was 260.05 + 113.151 + 78.055 + 278.029 = $729 Mil.
|Accounts Receivable was $4,985 Mil.
Revenue was 4549.578 + 4506.197 + 4210.468 + 2562.529 = $15,829 Mil.
Gross Profit was 126.518 + 103.312 + 134.73 + 129.031 = $494 Mil.
Total Current Assets was $6,227 Mil.
Total Assets was $14,236 Mil.
Property, Plant and Equipment(Net PPE) was $751 Mil.
Depreciation, Depletion and Amortization(DDA) was $476 Mil.
Selling, General & Admin. Expense(SGA) was $104 Mil.
Total Current Liabilities was $4,767 Mil.
Long-Term Debt was $4,602 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)|
|=||(2298.1 / 17811.366)||/||(4985.309 / 15828.772)|
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)|
|=||(493.591 / 15828.772)||/||(666.273 / 17811.366)|
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 - (6171.895 + 624.545) / 13878.327)||/||(1 - (6227.37 + 751.118) / 14236.126)|
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))|
|=||(476.068 / (476.068 + 751.118))||/||(463.581 / (463.581 + 624.545))|
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)|
|=||(112.379 / 17811.366)||/||(104.1 / 15828.772)|
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)|
|=||((3941.15 + 5286.219) / 13878.327)||/||((4602.483 + 4767.207) / 14236.126)|
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|
|=||(89.961 - -28.297||-||729.285)||/||13878.327|
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 -3.21 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