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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 Allegiant Travel Co was -1.79. The lowest was -3.58. And the median was -2.71.
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 Allegiant Travel Co 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 * 1.7265||+||0.528 * 0.9781||+||0.404 * 1.778||+||0.892 * 1.0797||+||0.115 * 1.1375|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.1471||+||4.679 * -0.0769||-||0.327 * 0.9411|
|This Year (Dec16) TTM:||Last Year (Dec15) TTM:|
|Accounts Receivable was $41 Mil.|
Revenue was 335.883 + 333.481 + 344.851 + 348.615 = $1,363 Mil.
Gross Profit was 204.727 + 205.661 + 222.257 + 237.497 = $870 Mil.
Total Current Assets was $422 Mil.
Total Assets was $1,672 Mil.
Property, Plant and Equipment(Net PPE) was $1,095 Mil.
Depreciation, Depletion and Amortization(DDA) was $105 Mil.
Selling, General & Admin. Expense(SGA) was $394 Mil.
Total Current Liabilities was $393 Mil.
Long-Term Debt was $722 Mil.
Net Income was 41.31 + 45.453 + 60.847 + 71.98 = $220 Mil.
Non Operating Income was 1.084 + 0.061 + 0.072 + 0.009 = $1 Mil.
Cash Flow from Operations was 38.768 + 51.994 + 95.66 + 160.439 = $347 Mil.
|Accounts Receivable was $22 Mil.
Revenue was 310.89 + 299.956 + 322.102 + 329.241 = $1,262 Mil.
Gross Profit was 199.868 + 179.861 + 194.826 + 213.653 = $788 Mil.
Total Current Assets was $402 Mil.
Total Assets was $1,358 Mil.
Property, Plant and Equipment(Net PPE) was $886 Mil.
Depreciation, Depletion and Amortization(DDA) was $98 Mil.
Selling, General & Admin. Expense(SGA) was $318 Mil.
Total Current Liabilities was $395 Mil.
Long-Term Debt was $568 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)|
|=||(40.667 / 1362.83)||/||(21.815 / 1262.189)|
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)|
|=||(788.208 / 1262.189)||/||(870.142 / 1362.83)|
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 - (422.054 + 1095.314) / 1671.576)||/||(1 - (401.912 + 885.942) / 1358.331)|
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))|
|=||(98.097 / (98.097 + 885.942))||/||(105.216 / (105.216 + 1095.314))|
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)|
|=||(394.368 / 1362.83)||/||(318.412 / 1262.189)|
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)|
|=||((722.048 + 392.898) / 1671.576)||/||((567.609 + 395.137) / 1358.331)|
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|
|=||(219.59 - 1.226||-||346.861)||/||1671.576|
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.
Allegiant Travel Co has a M-score of -1.79 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
Allegiant Travel Co Annual Data
Allegiant Travel Co Quarterly Data