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GuruFocus has detected 4 Warning Signs with AECOM $ACM.
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AECOM (NYSE:ACM)
Beneish M-Score
-3.32 (As of Today)

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.

AECOM has a M-score of -3.32 suggests that the company is not a manipulator.

ACM' s Beneish M-Score Range Over the Past 10 Years
Min: -3.32   Max: 0.18
Current: -3.32

-3.32
0.18

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.


Definition

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
=-3.32

* 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

Measured as the ratio of days’ sales in receivables in year t to year t-1.

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)
=0.12594781 / 0.26596428
=0.4736

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.

GMI=GrossMargin_t-1 / GrossMargin_t
=(GrossProfit_t-1 / Revenue_t-1) / (GrossProfit_t / Revenue_t)
=(541.316 / 18077.063) / (671.939 / 17471.523)
=0.02994491 / 0.0384591
=0.7786

3. AQI = Asset Quality Index

AQI is the ratio of asset quality in year t to year t-1.

Asset quality is measured as the ratio of non-current assets other than plant, property and equipment to total assets.

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)
=0.50995492 / 0.51968649
=0.9813

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.

SGI=Sales_t / Sales_t-1
=Revenue_t / Revenue_t-1
=17471.523 / 18077.063
=0.9665

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))
=0.47943496 / 0.35837517
=1.3378

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)
=0.00681612 / 0.00598969
=1.138

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)
=0.66005423 / 0.67419959
=0.979

8. TATA = Total Accruals to Total Assets

Total accruals calculated as the change in working capital accounts other than cash less depreciation.

TATA=(IncomefromContinuingOperations_t - CashFlowsfromOperations_t) / TotalAssets_t
=(NetIncome_t - NonOperatingIncome_t - CashFlowsfromOperations_t) / TotalAssets_t
=(163.655 - 5.998 - 813.607) / 13508.996
=-0.0486

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.


Related Terms

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


Historical Data

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

AECOM Annual Data

Sep07Sep08Sep09Sep10Sep11Sep12Sep13Sep14Sep15Sep16
DSRI 0.96531.22360.89831.17070.89320.98450.4592.3740.42450.9657
GMI 0.96614.96190.96230.87311.1321.13120.93011.14391.62170.8058
AQI 0.91041.09231.01681.09391.10020.90471.03270.98411.2831.0227
SGI 1.23841.2261.1781.06971.22791.02250.99211.02492.15270.9678
DEPI 1.10761.25910.81641.15040.91961.05830.92851.0230.54781.208
SGAI 1.01520.05661.04511.18840.66570.87621.21240.81120.65441.0433
LVGI 0.73461.23770.88651.17730.96851.03111.05240.99971.19460.9969
TATA -0.01290.0017-0.01070.0130.024-0.0887-0.0305-0.0218-0.067-0.0529
M-score -2.320.18-2.47-2.30-2.09-2.84-3.21-1.19-1.91-2.86

AECOM Quarterly Data

Sep14Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16Dec16
DSRI 2.3741.54151.23021.01980.42450.57920.36650.40970.96570.4736
GMI 1.14391.28441.52891.68771.62171.44651.03710.83360.80580.7786
AQI 0.98411.2911.24411.24651.2831.01610.98371.00091.02270.9813
SGI 1.02491.31191.66162.01042.15271.70321.35521.12530.96780.9665
DEPI 1.0231.19790.79220.64740.54780.43790.69190.91061.2081.3378
SGAI 0.81120.70330.58030.57980.65440.69550.84060.95941.04331.138
LVGI 0.99971.14971.22451.24951.19461.04581.0281.01020.99690.979
TATA -0.0218-0.0334-0.0426-0.0539-0.067-0.0455-0.0457-0.047-0.0529-0.0486
M-score -1.19-1.57-1.52-1.40-1.91-2.24-2.96-3.23-2.86-3.32
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