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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 Air T Inc was 9.57. The lowest was -3.76. And the median was -2.27.
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 * 1.2507||+||0.528 * 0.8583||+||0.404 * 0.9303||+||0.892 * 1.0637||+||0.115 * 0.6237|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0463||+||4.679 * -0.0679||-||0.327 * 0.985|
|This Year (Dec14) TTM:||Last Year (Dec13) TTM:|
|Accounts Receivable was $13.3 Mil.|
Revenue was 30.893 + 34.625 + 21.779 + 25.467 = $112.8 Mil.
Gross Profit was 5.236 + 6.482 + 3.361 + 4.377 = $19.5 Mil.
Total Current Assets was $37.5 Mil.
Total Assets was $42.5 Mil.
Property, Plant and Equipment(Net PPE) was $2.8 Mil.
Depreciation, Depletion and Amortization(DDA) was $0.9 Mil.
Selling, General & Admin. Expense(SGA) was $13.9 Mil.
Total Current Liabilities was $10.6 Mil.
Long-Term Debt was $0.0 Mil.
Net Income was 1.448 + 1.818 + 0.073 + 0.417 = $3.8 Mil.
Non Operating Income was 0 + 0 + 0.012 + 0.026 = $0.0 Mil.
Cash Flow from Operations was 7.651 + 1.089 + -1.665 + -0.468 = $6.6 Mil.
|Accounts Receivable was $10.0 Mil.
Revenue was 29.835 + 24.19 + 21.28 + 30.711 = $106.0 Mil.
Gross Profit was 4.761 + 3.752 + 3.315 + 3.872 = $15.7 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 $12.5 Mil.
Total Current Liabilities was $9.3 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)|
|=||(13.328 / 112.764)||/||(10.019 / 106.016)|
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)|
|=||(6.482 / 106.016)||/||(5.236 / 112.764)|
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 - (37.529 + 2.797) / 42.524)||/||(1 - (30.517 + 3.974) / 36.52)|
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))|
|=||(0.693 / (0.693 + 3.974))||/||(0.874 / (0.874 + 2.797))|
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)|
|=||(13.935 / 112.764)||/||(12.521 / 106.016)|
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 + 10.631) / 42.524)||/||((0 + 9.269) / 36.52)|
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|
|=||(3.756 - 0.038||-||6.607)||/||42.524|
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 -2.66 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
Air T Inc Annual Data
Air T Inc Quarterly Data