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GuruFocus has detected 3 Warning Signs with Air T Inc $AIRT.
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Air T Inc (NAS:AIRT)
Beneish M-Score
-2.33 (As of Today)

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 -2.33 suggests that the company is not a manipulator.

AIRT' s Beneish M-Score Range Over the Past 10 Years
Min: -3.79   Max: 9.56
Current: -2.33

-3.79
9.56

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 -2.27.


Definition

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 * 1.0026+0.528 * 0.8797+0.404 * 1.2307+0.892 * 1.2233+0.115 * 0.4301
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.5371+4.679 * 0.0963-0.327 * 2.1298
=-2.33

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

This Year (Sep16) TTM:Last Year (Sep15) TTM:
Accounts Receivable was $21.9 Mil.
Revenue was 38.523 + 30.493 + 34.581 + 46.619 = $150.2 Mil.
Gross Profit was 6.759 + 7.264 + 3.596 + 10.308 = $27.9 Mil.
Total Current Assets was $49.7 Mil.
Total Assets was $65.9 Mil.
Property, Plant and Equipment(Net PPE) was $4.9 Mil.
Depreciation, Depletion and Amortization(DDA) was $3.2 Mil.
Selling, General & Admin. Expense(SGA) was $27.7 Mil.
Total Current Liabilities was $20.1 Mil.
Long-Term Debt was $20.8 Mil.
Net Income was 1.069 + -3.676 + -1.086 + 2.971 = $-0.7 Mil.
Non Operating Income was 0.51 + -1.224 + 0.198 + 0.004 = $-0.5 Mil.
Cash Flow from Operations was -8.995 + -4.758 + 0.226 + 6.969 = $-6.6 Mil.
Accounts Receivable was $17.9 Mil.
Revenue was 44.654 + 22.359 + 24.885 + 30.893 = $122.8 Mil.
Gross Profit was 9.366 + 2.931 + 2.549 + 5.236 = $20.1 Mil.
Total Current Assets was $35.9 Mil.
Total Assets was $46.1 Mil.
Property, Plant and Equipment(Net PPE) was $3.8 Mil.
Depreciation, Depletion and Amortization(DDA) was $0.8 Mil.
Selling, General & Admin. Expense(SGA) was $14.7 Mil.
Total Current Liabilities was $12.0 Mil.
Long-Term Debt was $1.4 Mil.



1. DSRI = Days Sales in Receivables Index

Measured as the ratio of days’ sales in receivables in year t to year t-1.

A large increase in DSR could be indicative of revenue inflation.

DSRI=(Receivables_t / Revenue_t) / (Receivables_t-1 / Revenue_t-1)
=(21.932 / 150.216) / (17.881 / 122.791)
=0.14600309 / 0.14562142
=1.0026

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.

GMI=GrossMargin_t-1 / GrossMargin_t
=(GrossProfit_t-1 / Revenue_t-1) / (GrossProfit_t / Revenue_t)
=(20.082 / 122.791) / (27.927 / 150.216)
=0.16354619 / 0.18591229
=0.8797

3. AQI = Asset Quality Index

AQI is the ratio of asset quality in year t to year t-1.

Asset quality is measured as the ratio of non-current assets other than plant, property and equipment to total assets.

AQI=(1 - (CurrentAssets_t + PPE_t) / TotalAssets_t) / (1 - (CurrentAssets_t-1 + PPE_t-1) / TotalAssets_t-1)
=(1 - (49.749 + 4.9) / 65.932) / (1 - (35.875 + 3.833) / 46.121)
=0.17113086 / 0.13904729
=1.2307

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.

SGI=Sales_t / Sales_t-1
=Revenue_t / Revenue_t-1
=150.216 / 122.791
=1.2233

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))
=(0.79 / (0.79 + 3.833)) / (3.23 / (3.23 + 4.9))
=0.17088471 / 0.39729397
=0.4301

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)
=(27.654 / 150.216) / (14.706 / 122.791)
=0.1840949 / 0.11976448
=1.5371

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)
=((20.761 + 20.055) / 65.932) / ((1.382 + 12.024) / 46.121)
=0.61906206 / 0.29067019
=2.1298

8. TATA = Total Accruals to Total Assets

Total accruals calculated as the change in working capital accounts other than cash less depreciation.

TATA=(IncomefromContinuingOperations_t - CashFlowsfromOperations_t) / TotalAssets_t
=(NetIncome_t - NonOperatingIncome_t - CashFlowsfromOperations_t) / TotalAssets_t
=(-0.722 - -0.512 - -6.558) / 65.932
=0.0963

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 -2.33 suggests that the company will not be a manipulator.


Related Terms

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


Historical Data

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

Air T Inc Annual Data

Mar07Mar08Mar09Mar10Mar11Mar12Mar13Mar14Mar15Mar16
DSRI 1.03891.37840.44061.00172.02990.71421.13230.89670.83590.9766
GMI 0.80761.04440.98960.99471.18671.11431.08830.8791.02340.8888
AQI 0.96681.0751.12430.80641.00170.83361.00590.98240.91043.2429
SGI 0.84631.16491.15650.89421.02821.07221.15310.97781.11321.3212
DEPI 0.78781.10540.95120.89341.0182.16360.81760.83830.63511.1602
SGAI 1.17660.91440.95561.05880.96760.99840.86481.16220.99470.9653
LVGI 0.95160.93380.79890.61441.46760.97370.96021.11141.25790.989
TATA -0.00940.1037-0.0989-0.05950.19450.0164-0.07470.0536-0.10020.0293
M-score -2.78-1.40-3.21-2.83-0.64-2.47-2.51-2.50-3.15-1.20

Air T Inc Quarterly Data

Jun14Sep14Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16
DSRI 0.87431.17151.25070.83590.94420.97320.91430.97660.7851.0026
GMI 0.89920.85790.85831.02341.05221.0390.95010.88890.78090.8797
AQI 1.3041.2450.93030.91042.16182.12122.77813.24290.77191.2307
SGI 1.01421.08571.06371.11321.11351.09921.22841.32121.38651.2233
DEPI 0.64960.74910.62370.63450.89041.02211.48251.16050.61610.4301
SGAI 1.11991.10831.04630.99471.01240.95180.99390.96541.27561.5371
LVGI 0.98560.88140.9851.25791.24471.21040.97890.9891.3792.1298
TATA 0.08-0.0397-0.0677-0.1003-0.0530.00530.04920.02970.00110.0963
M-score -2.20-2.42-2.66-3.15-2.28-1.98-1.37-1.20-2.75-2.33
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