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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 (Sep15) TTM:||Last Year (Sep14) TTM:|
|Accounts Receivable was $1,706 Mil.|
Revenue was 4432 + 3942 + 4708 + 4461 = $17,543 Mil.
Gross Profit was 2746 + 2585 + 2919 + 2954 = $11,204 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 $2,039 Mil.
Selling, General & Admin. Expense(SGA) was $0 Mil.
Total Current Liabilities was $7,058 Mil.
Long-Term Debt was $17,600 Mil.
Net Income was 519 + 430 + 629 + 191 = $1,769 Mil.
Non Operating Income was 34 + 43 + 38 + 40 = $155 Mil.
Cash Flow from Operations was 1707 + 946 + 1257 + 898 = $4,808 Mil.
|Accounts Receivable was $1,665 Mil.
Revenue was 4161 + 4044 + 4648 + 3773 = $16,626 Mil.
Gross Profit was 2632 + 2528 + 2842 + 2424 = $10,426 Mil.
Total Current Assets was $4,111 Mil.
Total Assets was $57,925 Mil.
Property, Plant and Equipment(Net PPE) was $43,064 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,851 Mil.
Selling, General & Admin. Expense(SGA) was $0 Mil.
Total Current Liabilities was $7,457 Mil.
Long-Term Debt was $15,677 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)|
|=||(1706 / 17543)||/||(1665 / 16626)|
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)|
|=||(2585 / 16626)||/||(2746 / 17543)|
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 - (4548 + 45238) / 61099)||/||(1 - (4111 + 43064) / 57925)|
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))|
|=||(1851 / (1851 + 43064))||/||(2039 / (2039 + 45238))|
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 / 17543)||/||(0 / 16626)|
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)|
|=||((17600 + 7058) / 61099)||/||((15677 + 7457) / 57925)|
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|
|=||(1769 - 155||-||4808)||/||61099|
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