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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 14 years, the highest Beneish M-Score of Allegiant Travel Co was -1.60. The lowest was -3.58. And the median was -3.00.
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 * 0.9673||+||0.528 * 0.8467||+||0.404 * 1.4593||+||0.892 * 1.1012||+||0.115 * 1.0797|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.4058||+||4.679 * -0.0965||-||0.327 * 0.9674|
|This Year (Mar16) TTM:||Last Year (Mar15) TTM:|
|Accounts Receivable was $14 Mil.|
Revenue was 348.615 + 310.89 + 299.956 + 322.102 = $1,282 Mil.
Gross Profit was 237.497 + 199.868 + 179.861 + 194.826 = $812 Mil.
Total Current Assets was $401 Mil.
Total Assets was $1,405 Mil.
Property, Plant and Equipment(Net PPE) was $931 Mil.
Depreciation, Depletion and Amortization(DDA) was $98 Mil.
Selling, General & Admin. Expense(SGA) was $329 Mil.
Total Current Liabilities was $423 Mil.
Long-Term Debt was $571 Mil.
Net Income was 71.98 + 56.709 + 44.458 + 54.339 = $227 Mil.
Non Operating Income was 0.009 + 0.019 + 0.067 + 0.055 = $0 Mil.
Cash Flow from Operations was 160.439 + 97.757 + 36.865 + 67.785 = $363 Mil.
|Accounts Receivable was $13 Mil.
Revenue was 329.241 + 278.952 + 265.029 + 290.541 = $1,164 Mil.
Gross Profit was 213.653 + 139.694 + 126.539 + 144.462 = $624 Mil.
Total Current Assets was $477 Mil.
Total Assets was $1,299 Mil.
Property, Plant and Equipment(Net PPE) was $775 Mil.
Depreciation, Depletion and Amortization(DDA) was $89 Mil.
Selling, General & Admin. Expense(SGA) was $212 Mil.
Total Current Liabilities was $394 Mil.
Long-Term Debt was $557 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)|
|=||(14.346 / 1281.563)||/||(13.468 / 1163.763)|
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)|
|=||(199.868 / 1163.763)||/||(237.497 / 1281.563)|
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 - (400.515 + 930.55) / 1404.795)||/||(1 - (476.783 + 775.474) / 1298.977)|
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))|
|=||(89.325 / (89.325 + 775.474))||/||(98.435 / (98.435 + 930.55))|
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)|
|=||(328.891 / 1281.563)||/||(212.451 / 1163.763)|
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)|
|=||((571.28 + 423.135) / 1404.795)||/||((556.505 + 394.019) / 1298.977)|
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|
|=||(227.486 - 0.15||-||362.846)||/||1404.795|
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 -2.82 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
Allegiant Travel Co Annual Data
Allegiant Travel Co Quarterly Data