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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 American Electric Power Co Inc was 0.00. The lowest was 0.00. And the median was 0.00.
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 American Electric Power Co Inc 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 *||+||0.528 *||+||0.404 *||+||0.892 *||+||0.115 *|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 *||+||4.679 *||-||0.327 *|
|This Year (Sep16) TTM:||Last Year (Sep15) TTM:|
|Accounts Receivable was $1,713 Mil.|
Revenue was 4652.2 + 3892.9 + 4044.9 + 3614.7 = $16,205 Mil.
Gross Profit was 2998.1 + 2583.3 + 2637.9 + 2338.9 = $10,558 Mil.
Total Current Assets was $5,949 Mil.
Total Assets was $61,442 Mil.
Property, Plant and Equipment(Net PPE) was $44,262 Mil.
Depreciation, Depletion and Amortization(DDA) was $2,032 Mil.
Selling, General & Admin. Expense(SGA) was $0 Mil.
Total Current Liabilities was $7,779 Mil.
Long-Term Debt was $17,320 Mil.
Net Income was -765.8 + 502.1 + 501.2 + 469.6 = $707 Mil.
Non Operating Income was 27.3 + 35.1 + 35.6 + 40.6 = $139 Mil.
Cash Flow from Operations was 1695.2 + 925.9 + 799.9 + 838 = $4,259 Mil.
|Accounts Receivable was $1,706 Mil.
Revenue was 4431.4 + 3826.7 + 4580.4 + 3819.6 = $16,658 Mil.
Gross Profit was 2744.7 + 2470.6 + 2790.8 + 2312.9 = $10,319 Mil.
Total Current Assets was $4,548 Mil.
Total Assets was $61,099 Mil.
Property, Plant and Equipment(Net PPE) was $45,238 Mil.
Depreciation, Depletion and Amortization(DDA) was $2,008 Mil.
Selling, General & Admin. Expense(SGA) was $0 Mil.
Total Current Liabilities was $7,058 Mil.
Long-Term Debt was $17,600 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)|
|=||(1713.3 / 16204.7)||/||(1706 / 16658.1)|
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)|
|=||(10319 / 16658.1)||/||(10558.2 / 16204.7)|
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 - (5949.2 + 44262.2) / 61442)||/||(1 - (4548 + 45238) / 61099)|
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))|
|=||(2007.6 / (2007.6 + 45238))||/||(2031.9 / (2031.9 + 44262.2))|
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)|
|=||(0 / 16204.7)||/||(0 / 16658.1)|
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)|
|=||((17319.9 + 7779.4) / 61442)||/||((17600 + 7058) / 61099)|
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|
|=||(707.1 - 138.6||-||4259)||/||61442|
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.
American Electric Power Co Inc has a M-score of signals that the company is likely to 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
American Electric Power Co Inc Annual Data
American Electric Power Co Inc Quarterly Data