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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 -2.34 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 -3.43. And the median was -2.38.
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 * 1.0664||+||0.528 * 0.879||+||0.404 * 0.9824||+||0.892 * 0.9778||+||0.115 * 0.8383|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.1619||+||4.679 * 0.0535||-||0.327 * 1.1114|
|This Year (Mar14) TTM:||Last Year (Mar13) TTM:|
|Accounts Receivable was $12.6 Mil.|
Revenue was 25.467 + 29.835 + 24.19 + 21.28 = $100.8 Mil.
Gross Profit was 4.377 + 4.761 + 3.752 + 3.315 = $16.2 Mil.
Total Current Assets was $31.2 Mil.
Total Assets was $37.2 Mil.
Property, Plant and Equipment(Net PPE) was $4.0 Mil.
Depreciation, Depletion and Amortization(DDA) was $0.8 Mil.
Selling, General & Admin. Expense(SGA) was $12.8 Mil.
Total Current Liabilities was $9.0 Mil.
Long-Term Debt was $0.0 Mil.
Net Income was 0.417 + 0.455 + 0.456 + 0.139 = $1.5 Mil.
Non Operating Income was 0.026 + 0 + 0.006 + 0 = $0.0 Mil.
Cash Flow from Operations was -0.468 + 5.342 + -4.887 + -0.542 = $-0.6 Mil.
|Accounts Receivable was $12.1 Mil.
Revenue was 30.711 + 26.703 + 21.162 + 24.488 = $103.1 Mil.
Gross Profit was 3.872 + 4.058 + 3.163 + 3.475 = $14.6 Mil.
Total Current Assets was $30.5 Mil.
Total Assets was $36.1 Mil.
Property, Plant and Equipment(Net PPE) was $3.5 Mil.
Depreciation, Depletion and Amortization(DDA) was $0.5 Mil.
Selling, General & Admin. Expense(SGA) was $11.3 Mil.
Total Current Liabilities was $7.9 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)|
|=||(12.637 / 100.772)||/||(12.12 / 103.064)|
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)|
|=||(4.761 / 103.064)||/||(4.377 / 100.772)|
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 - (31.152 + 3.986) / 37.221)||/||(1 - (30.528 + 3.473) / 36.055)|
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))|
|=||(0.533 / (0.533 + 3.473))||/||(0.752 / (0.752 + 3.986))|
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)|
|=||(12.843 / 100.772)||/||(11.305 / 103.064)|
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 + 9.019) / 37.221)||/||((0 + 7.861) / 36.055)|
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|
|=||(1.467 - 0.032||-||-0.555)||/||37.221|
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 -2.34 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