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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 -2.42 suggests that the company is not 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 -2.25.
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 * 1.1715||+||0.528 * 0.8579||+||0.404 * 1.245||+||0.892 * 1.0857||+||0.115 * 0.7491|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.1083||+||4.679 * -0.04||-||0.327 * 0.8814|
* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.
|This Year (Sep14) TTM:||Last Year (Sep13) TTM:|
|Accounts Receivable was $16.7 Mil.|
Revenue was 34.625 + 21.779 + 25.467 + 29.835 = $111.7 Mil.
Gross Profit was 6.482 + 3.361 + 4.377 + 4.761 = $19.0 Mil.
Total Current Assets was $32.7 Mil.
Total Assets was $39.4 Mil.
Property, Plant and Equipment(Net PPE) was $4.1 Mil.
Depreciation, Depletion and Amortization(DDA) was $0.9 Mil.
Selling, General & Admin. Expense(SGA) was $14.1 Mil.
Total Current Liabilities was $8.1 Mil.
Long-Term Debt was $1.3 Mil.
Net Income was 1.818 + 0.073 + 0.417 + 0.455 = $2.8 Mil.
Non Operating Income was 0 + 0.012 + 0.026 + 0 = $0.0 Mil.
Cash Flow from Operations was 1.089 + -1.665 + -0.468 + 5.342 = $4.3 Mil.
|Accounts Receivable was $13.1 Mil.
Revenue was 24.19 + 21.28 + 30.711 + 26.703 = $102.9 Mil.
Gross Profit was 3.752 + 3.315 + 3.872 + 4.058 = $15.0 Mil.
Total Current Assets was $32.5 Mil.
Total Assets was $38.6 Mil.
Property, Plant and Equipment(Net PPE) was $4.1 Mil.
Depreciation, Depletion and Amortization(DDA) was $0.6 Mil.
Selling, General & Admin. Expense(SGA) was $11.7 Mil.
Total Current Liabilities was $9.7 Mil.
Long-Term Debt was $0.8 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)|
|=||(16.714 / 111.706)||/||(13.14 / 102.884)|
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)|
|=||(3.361 / 102.884)||/||(6.482 / 111.706)|
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 - (32.682 + 4.097) / 39.359)||/||(1 - (32.466 + 4.079) / 38.576)|
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))|
|=||(0.614 / (0.614 + 4.079))||/||(0.867 / (0.867 + 4.097))|
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)|
|=||(14.056 / 111.706)||/||(11.681 / 102.884)|
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)|
|=||((1.331 + 8.121) / 39.359)||/||((0.783 + 9.727) / 38.576)|
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|
|=||(2.763 - 0.038||-||4.298)||/||39.359|
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 -2.42 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