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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 9.56. The lowest was -3.79. And the median was -2.28.
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 * 1.0119||+||0.528 * 0.9156||+||0.404 * 1.2203||+||0.892 * 1.0061||+||0.115 * 0.4087|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.7816||+||4.679 * 0.126||-||0.327 * 2.3244|
* 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 $15.2 Mil.|
Revenue was 35.769 + 38.523 + 30.493 + 34.581 = $139.4 Mil.
Gross Profit was 7.133 + 6.759 + 7.264 + 4.972 = $26.1 Mil.
Total Current Assets was $46.0 Mil.
Total Assets was $62.0 Mil.
Property, Plant and Equipment(Net PPE) was $5.2 Mil.
Depreciation, Depletion and Amortization(DDA) was $3.3 Mil.
Selling, General & Admin. Expense(SGA) was $28.0 Mil.
Total Current Liabilities was $16.9 Mil.
Long-Term Debt was $18.4 Mil.
Net Income was 0.856 + 1.069 + -3.676 + -1.086 = $-2.8 Mil.
Non Operating Income was 0.312 + 0.51 + -1.224 + 0.198 = $-0.2 Mil.
Cash Flow from Operations was 3.08 + -8.995 + -4.758 + 0.226 = $-10.4 Mil.
|Accounts Receivable was $15.0 Mil.
Revenue was 46.619 + 44.654 + 22.359 + 24.885 = $138.5 Mil.
Gross Profit was 8.932 + 9.366 + 2.931 + 2.549 = $23.8 Mil.
Total Current Assets was $38.1 Mil.
Total Assets was $49.8 Mil.
Property, Plant and Equipment(Net PPE) was $4.5 Mil.
Depreciation, Depletion and Amortization(DDA) was $0.9 Mil.
Selling, General & Admin. Expense(SGA) was $15.6 Mil.
Total Current Liabilities was $12.2 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)|
|=||(15.24 / 139.366)||/||(14.969 / 138.517)|
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)|
|=||(23.778 / 138.517)||/||(26.128 / 139.366)|
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 - (45.99 + 5.169) / 62.028)||/||(1 - (38.096 + 4.516) / 49.757)|
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))|
|=||(0.864 / (0.864 + 4.516))||/||(3.346 / (3.346 + 5.169))|
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)|
|=||(28.029 / 139.366)||/||(15.637 / 138.517)|
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)|
|=||((18.359 + 16.925) / 62.028)||/||((0.011 + 12.166) / 49.757)|
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|
|=||(-2.837 - -0.204||-||-10.447)||/||62.028|
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 -2.47 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