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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 American Pacific Corporation was 0.00. The lowest was 0.00. And the median was 0.00.
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 American Pacific Corporation 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 * 0.7704||+||0.528 * 0.8815||+||0.404 * 0.3786||+||0.892 * 1.1587||+||0.115 * 1.0725|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9954||+||4.679 * -0.0932||-||0.327 * 1.0092|
|This Year (Sep13) TTM:||Last Year (Sep12) TTM:|
|Accounts Receivable was $20.9 Mil.|
Revenue was 59.204 + 69.519 + 50.044 + 36.318 = $215.1 Mil.
Gross Profit was 30.442 + 25.206 + 15.894 + 15.412 = $87.0 Mil.
Total Current Assets was $161.1 Mil.
Total Assets was $277.3 Mil.
Property, Plant and Equipment(Net PPE) was $103.8 Mil.
Depreciation, Depletion and Amortization(DDA) was $13.5 Mil.
Selling, General & Admin. Expense(SGA) was $45.9 Mil.
Total Current Liabilities was $74.8 Mil.
Long-Term Debt was $49.5 Mil.
Net Income was 10.957 + 8.388 + 2.732 + 1.155 = $23.2 Mil.
Non Operating Income was 0 + 0 + 0.008 + -2.835 = $-2.8 Mil.
Cash Flow from Operations was 4.216 + 39.098 + 11.853 + -3.272 = $51.9 Mil.
|Accounts Receivable was $23.4 Mil.
Revenue was 49.601 + 57.623 + 39.918 + 38.485 = $185.6 Mil.
Gross Profit was 19.415 + 20.887 + 13.618 + 12.23 = $66.2 Mil.
Total Current Assets was $114.1 Mil.
Total Assets was $246.5 Mil.
Property, Plant and Equipment(Net PPE) was $103.3 Mil.
Depreciation, Depletion and Amortization(DDA) was $14.5 Mil.
Selling, General & Admin. Expense(SGA) was $39.8 Mil.
Total Current Liabilities was $44.4 Mil.
Long-Term Debt was $65.0 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)|
|=||(20.875 / 215.085)||/||(23.384 / 185.627)|
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)|
|=||(25.206 / 185.627)||/||(30.442 / 215.085)|
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 - (161.067 + 103.847) / 277.307)||/||(1 - (114.057 + 103.316) / 246.464)|
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))|
|=||(14.491 / (14.491 + 103.316))||/||(13.453 / (13.453 + 103.847))|
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)|
|=||(45.865 / 215.085)||/||(39.766 / 185.627)|
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)|
|=||((49.5 + 74.774) / 277.307)||/||((65.004 + 44.442) / 246.464)|
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|
|=||(23.232 - -2.827||-||51.895)||/||277.307|
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.
American Pacific Corporation has a M-score of -3.29 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
American Pacific Corporation Annual Data
American Pacific Corporation Quarterly Data