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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.
Air T Inc has a M-score of -2.03 signals that the company is a manipulator.
During the past 13 years, the highest Beneish M-Score of Air T Inc was 9.57. The lowest was -3.76. And the median was -2.24.
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 Air T 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 * 1.0852||+||0.528 * 0.9436||+||0.404 * 1.0897||+||0.892 * 1.1271||+||0.115 * 1.544|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.047||+||4.679 * 0.0487||-||0.327 * 1.0919|
|This Year (Dec13) TTM:||Last Year (Dec12) TTM:|
|Accounts Receivable was $10.5 Mil.|
Revenue was 29.835 + 24.19 + 21.28 + 30.711 = $106.0 Mil.
Gross Profit was 4.761 + 3.752 + 3.315 + 5.026 = $16.9 Mil.
Total Current Assets was $30.5 Mil.
Total Assets was $36.5 Mil.
Property, Plant and Equipment(Net PPE) was $4.0 Mil.
Depreciation, Depletion and Amortization(DDA) was $0.7 Mil.
Selling, General & Admin. Expense(SGA) was $13.7 Mil.
Total Current Liabilities was $9.3 Mil.
Long-Term Debt was $0.0 Mil.
Net Income was 0.455 + 0.456 + 0.139 + 0.393 = $1.4 Mil.
Non Operating Income was 0 + 0.006 + 0 + 0.002 = $0.0 Mil.
Cash Flow from Operations was 5.342 + -4.887 + -0.542 + -0.258 = $-0.3 Mil.
|Accounts Receivable was $8.6 Mil.
Revenue was 26.703 + 21.162 + 24.488 + 21.71 = $94.1 Mil.
Gross Profit was 4.058 + 3.163 + 3.475 + 3.414 = $14.1 Mil.
Total Current Assets was $32.5 Mil.
Total Assets was $36.2 Mil.
Property, Plant and Equipment(Net PPE) was $1.9 Mil.
Depreciation, Depletion and Amortization(DDA) was $0.6 Mil.
Selling, General & Admin. Expense(SGA) was $11.6 Mil.
Total Current Liabilities was $8.4 Mil.
Long-Term Debt was $0.0 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)|
|=||(10.481 / 106.016)||/||(8.569 / 94.063)|
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)|
|=||(3.752 / 94.063)||/||(4.761 / 106.016)|
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 - (30.517 + 3.974) / 36.52)||/||(1 - (32.501 + 1.859) / 36.206)|
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))|
|=||(0.553 / (0.553 + 1.859))||/||(0.693 / (0.693 + 3.974))|
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)|
|=||(13.675 / 106.016)||/||(11.588 / 94.063)|
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)|
|=||((0 + 9.269) / 36.52)||/||((0 + 8.416) / 36.206)|
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|
|=||(1.443 - 0.008||-||-0.345)||/||36.52|
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.
Air T Inc has a M-score of -2.03 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
Air T Inc Annual Data
Air T Inc Quarterly Data