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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 -2.27.
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 * 0.785||+||0.528 * 0.7809||+||0.404 * 0.7719||+||0.892 * 1.3865||+||0.115 * 0.6161|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.2756||+||4.679 * 0.0011||-||0.327 * 1.379|
|This Year (Jun16) TTM:||Last Year (Jun15) TTM:|
|Accounts Receivable was $11.2 Mil.|
Revenue was 30.493 + 34.581 + 46.619 + 44.654 = $156.3 Mil.
Gross Profit was 7.264 + 3.596 + 10.308 + 9.366 = $30.5 Mil.
Total Current Assets was $39.5 Mil.
Total Assets was $50.4 Mil.
Property, Plant and Equipment(Net PPE) was $4.8 Mil.
Depreciation, Depletion and Amortization(DDA) was $3.1 Mil.
Selling, General & Admin. Expense(SGA) was $26.2 Mil.
Total Current Liabilities was $19.1 Mil.
Long-Term Debt was $3.3 Mil.
Net Income was -3.676 + -1.086 + 2.971 + 3.794 = $2.0 Mil.
Non Operating Income was -1.224 + 0.198 + 0.004 + 0 = $-1.0 Mil.
Cash Flow from Operations was -4.758 + 0.226 + 6.969 + 0.534 = $3.0 Mil.
|Accounts Receivable was $10.3 Mil.
Revenue was 22.359 + 24.885 + 30.893 + 34.625 = $112.8 Mil.
Gross Profit was 2.931 + 2.549 + 5.236 + 6.482 = $17.2 Mil.
Total Current Assets was $33.8 Mil.
Total Assets was $43.1 Mil.
Property, Plant and Equipment(Net PPE) was $2.6 Mil.
Depreciation, Depletion and Amortization(DDA) was $0.8 Mil.
Selling, General & Admin. Expense(SGA) was $14.8 Mil.
Total Current Liabilities was $8.9 Mil.
Long-Term Debt was $5.0 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)|
|=||(11.231 / 156.347)||/||(10.319 / 112.762)|
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)|
|=||(17.198 / 112.762)||/||(30.534 / 156.347)|
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 - (39.546 + 4.813) / 50.374)||/||(1 - (33.848 + 2.598) / 43.116)|
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))|
|=||(0.82 / (0.82 + 2.598))||/||(3.069 / (3.069 + 4.813))|
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)|
|=||(26.169 / 156.347)||/||(14.796 / 112.762)|
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)|
|=||((3.321 + 19.11) / 50.374)||/||((4.981 + 8.941) / 43.116)|
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|
|=||(2.003 - -1.022||-||2.971)||/||50.374|
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 -2.75 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