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Beneish M-Score -1.2 higher than -2.22, which implies that it might have manipulated its financial results.
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 -3.34. And the median was -2.46.
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 * 0.9766||+||0.528 * 0.8889||+||0.404 * 3.2429||+||0.892 * 1.3212||+||0.115 * 1.1605|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9654||+||4.679 * 0.0297||-||0.327 * 0.989|
|This Year (Mar16) TTM:||Last Year (Mar15) TTM:|
|Accounts Receivable was $12.3 Mil.|
Revenue was 34.581 + 46.619 + 44.654 + 22.359 = $148.2 Mil.
Gross Profit was 3.596 + 10.308 + 9.366 + 2.931 = $26.2 Mil.
Total Current Assets was $39.0 Mil.
Total Assets was $52.2 Mil.
Property, Plant and Equipment(Net PPE) was $4.6 Mil.
Depreciation, Depletion and Amortization(DDA) was $1.3 Mil.
Selling, General & Admin. Expense(SGA) was $18.1 Mil.
Total Current Liabilities was $15.7 Mil.
Long-Term Debt was $0.0 Mil.
Net Income was -1.086 + 2.971 + 3.794 + -0.736 = $4.9 Mil.
Non Operating Income was 0.198 + 0.004 + 0 + -0.02 = $0.2 Mil.
Cash Flow from Operations was 0.226 + 6.969 + 0.534 + -4.515 = $3.2 Mil.
|Accounts Receivable was $9.5 Mil.
Revenue was 24.885 + 30.893 + 34.625 + 21.779 = $112.2 Mil.
Gross Profit was 2.549 + 5.236 + 6.482 + 3.361 = $17.6 Mil.
Total Current Assets was $38.7 Mil.
Total Assets was $43.5 Mil.
Property, Plant and Equipment(Net PPE) was $2.6 Mil.
Depreciation, Depletion and Amortization(DDA) was $0.9 Mil.
Selling, General & Admin. Expense(SGA) was $14.2 Mil.
Total Current Liabilities was $8.2 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)|
|=||(12.303 / 148.213)||/||(9.535 / 112.182)|
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)|
|=||(17.628 / 112.182)||/||(26.201 / 148.213)|
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 - (38.96 + 4.578) / 52.155)||/||(1 - (38.67 + 2.572) / 43.456)|
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))|
|=||(0.858 / (0.858 + 2.572))||/||(1.258 / (1.258 + 4.578))|
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)|
|=||(18.139 / 148.213)||/||(14.222 / 112.182)|
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)|
|=||((0.005 + 15.717) / 52.155)||/||((5 + 8.245) / 43.456)|
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|
|=||(4.943 - 0.182||-||3.214)||/||52.155|
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 -1.20 signals that the company is likely to 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