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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 -3.32. And the median was -2.30.
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 * 0.4736||+||0.528 * 0.7786||+||0.404 * 0.9813||+||0.892 * 0.9665||+||0.115 * 1.3378|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.138||+||4.679 * -0.0486||-||0.327 * 0.979|
* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.
|This Year (Dec16) TTM:||Last Year (Dec15) TTM:|
|Accounts Receivable was $2,201 Mil.|
Revenue was 4358.349 + 4323.096 + 4408.782 + 4381.296 = $17,472 Mil.
Gross Profit was 169.973 + 147.179 + 171.343 + 183.444 = $672 Mil.
Total Current Assets was $5,985 Mil.
Total Assets was $13,509 Mil.
Property, Plant and Equipment(Net PPE) was $635 Mil.
Depreciation, Depletion and Amortization(DDA) was $355 Mil.
Selling, General & Admin. Expense(SGA) was $119 Mil.
Total Current Liabilities was $5,165 Mil.
Long-Term Debt was $3,751 Mil.
Net Income was 47.179 + 7.204 + 67.444 + 41.828 = $164 Mil.
Non Operating Income was 0.86 + 2.894 + 1.498 + 0.746 = $6 Mil.
Cash Flow from Operations was 77.507 + 362.899 + 260.05 + 113.151 = $814 Mil.
|Accounts Receivable was $4,808 Mil.
Revenue was 4297.651 + 4723.637 + 4549.578 + 4506.197 = $18,077 Mil.
Gross Profit was 140.858 + 170.628 + 126.518 + 103.312 = $541 Mil.
Total Current Assets was $5,897 Mil.
Total Assets was $13,529 Mil.
Property, Plant and Equipment(Net PPE) was $602 Mil.
Depreciation, Depletion and Amortization(DDA) was $554 Mil.
Selling, General & Admin. Expense(SGA) was $108 Mil.
Total Current Liabilities was $4,755 Mil.
Long-Term Debt was $4,366 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)|
|=||(2200.5 / 17471.523)||/||(4807.853 / 18077.063)|
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)|
|=||(541.316 / 18077.063)||/||(671.939 / 17471.523)|
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 - (5985.101 + 634.916) / 13508.996)||/||(1 - (5896.574 + 601.781) / 13529.403)|
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))|
|=||(554.234 / (554.234 + 601.781))||/||(354.628 / (354.628 + 634.916))|
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)|
|=||(119.088 / 17471.523)||/||(108.276 / 18077.063)|
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)|
|=||((3751.342 + 5165.328) / 13508.996)||/||((4366.424 + 4755.094) / 13529.403)|
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|
|=||(163.655 - 5.998||-||813.607)||/||13508.996|
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 -3.32 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