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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 12 years, the highest Beneish M-Score of AeroVironment Inc was 1.50. The lowest was -3.46. And the median was -2.40.
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 AeroVironment 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 * 0.8369||+||0.528 * 0.9671||+||0.404 * 1.0822||+||0.892 * 1.0607||+||0.115 * 0.7903|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0158||+||4.679 * -0.0969||-||0.327 * 1.1519|
|This Year (Jan15) TTM:||Last Year (Jan14) TTM:|
|Accounts Receivable was $37.8 Mil.|
Revenue was 68.397 + 52.664 + 51.866 + 73.498 = $246.4 Mil.
Gross Profit was 26.993 + 17.871 + 14.054 + 30.138 = $89.1 Mil.
Total Current Assets was $309.9 Mil.
Total Assets was $386.5 Mil.
Property, Plant and Equipment(Net PPE) was $16.1 Mil.
Depreciation, Depletion and Amortization(DDA) was $8.7 Mil.
Selling, General & Admin. Expense(SGA) was $57.1 Mil.
Total Current Liabilities was $43.7 Mil.
Long-Term Debt was $0.0 Mil.
Net Income was 2.325 + -2.901 + -3.609 + 8.057 = $3.9 Mil.
Non Operating Income was -0.284 + -0.583 + 0.591 + 2.648 = $2.4 Mil.
Cash Flow from Operations was 3.582 + -4.407 + 14.368 + 25.391 = $38.9 Mil.
|Accounts Receivable was $42.6 Mil.
Revenue was 69.221 + 64.867 + 44.117 + 54.11 = $232.3 Mil.
Gross Profit was 27.052 + 23.878 + 12.545 + 17.722 = $81.2 Mil.
Total Current Assets was $289.4 Mil.
Total Assets was $366.9 Mil.
Property, Plant and Equipment(Net PPE) was $24.5 Mil.
Depreciation, Depletion and Amortization(DDA) was $9.4 Mil.
Selling, General & Admin. Expense(SGA) was $53.0 Mil.
Total Current Liabilities was $36.0 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)|
|=||(37.834 / 246.425)||/||(42.617 / 232.315)|
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)|
|=||(17.871 / 232.315)||/||(26.993 / 246.425)|
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 - (309.896 + 16.143) / 386.471)||/||(1 - (289.379 + 24.492) / 366.881)|
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))|
|=||(9.396 / (9.396 + 24.492))||/||(8.724 / (8.724 + 16.143))|
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)|
|=||(57.109 / 246.425)||/||(53.001 / 232.315)|
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 + 43.66) / 386.471)||/||((0 + 35.981) / 366.881)|
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|
|=||(3.872 - 2.372||-||38.934)||/||386.471|
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.
AeroVironment Inc has a M-score of -3.09 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
AeroVironment Inc Annual Data
AeroVironment Inc Quarterly Data