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GuruFocus has detected 4 Warning Signs with AeroVironment Inc $AVAV.
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AeroVironment Inc (NAS:AVAV)
Beneish M-Score
-2.74 (As of Today)

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.

AeroVironment Inc has a M-score of -2.74 suggests that the company is not a manipulator.

AVAV' s Beneish M-Score Range Over the Past 10 Years
Min: -3.53   Max: 1.5
Current: -2.74

-3.53
1.5

During the past 13 years, the highest Beneish M-Score of AeroVironment Inc was 1.50. The lowest was -3.53. And the median was -2.42.


Definition

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 * 0.7029+0.528 * 1.2393+0.404 * 1.3264+0.892 * 0.8437+0.115 * 1.1741
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.1388+4.679 * -0.0105-0.327 * 1.1542
=-2.74

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

This Year (Jan17) TTM:Last Year (Jan16) TTM:
Accounts Receivable was $23.1 Mil.
Revenue was 53.163 + 50.116 + 36.218 + 84.757 = $224.3 Mil.
Gross Profit was 19.351 + 17.417 + 6.683 + 37.922 = $81.4 Mil.
Total Current Assets was $308.9 Mil.
Total Assets was $387.5 Mil.
Property, Plant and Equipment(Net PPE) was $18.4 Mil.
Depreciation, Depletion and Amortization(DDA) was $6.7 Mil.
Selling, General & Admin. Expense(SGA) was $56.6 Mil.
Total Current Liabilities was $38.0 Mil.
Long-Term Debt was $0.2 Mil.
Net Income was -2.183 + -4.172 + -11.642 + 5.364 = $-12.6 Mil.
Non Operating Income was -0.046 + -0.13 + -0.3 + 0.097 = $-0.4 Mil.
Cash Flow from Operations was -8.145 + -5.036 + -1.243 + 6.25 = $-8.2 Mil.
Accounts Receivable was $39.0 Mil.
Revenue was 67.56 + 64.731 + 47.05 + 86.471 = $265.8 Mil.
Gross Profit was 26.625 + 31.533 + 16.023 + 45.35 = $119.5 Mil.
Total Current Assets was $329.6 Mil.
Total Assets was $389.5 Mil.
Property, Plant and Equipment(Net PPE) was $14.3 Mil.
Depreciation, Depletion and Amortization(DDA) was $6.5 Mil.
Selling, General & Admin. Expense(SGA) was $58.9 Mil.
Total Current Liabilities was $32.9 Mil.
Long-Term Debt was $0.4 Mil.



1. DSRI = Days Sales in Receivables Index

Measured as the ratio of days’ sales in receivables in year t to year t-1.

A large increase in DSR could be indicative of revenue inflation.

DSRI=(Receivables_t / Revenue_t) / (Receivables_t-1 / Revenue_t-1)
=(23.121 / 224.254) / (38.991 / 265.812)
=0.10310184 / 0.14668638
=0.7029

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.

GMI=GrossMargin_t-1 / GrossMargin_t
=(GrossProfit_t-1 / Revenue_t-1) / (GrossProfit_t / Revenue_t)
=(119.531 / 265.812) / (81.373 / 224.254)
=0.44968248 / 0.36286086
=1.2393

3. AQI = Asset Quality Index

AQI is the ratio of asset quality in year t to year t-1.

Asset quality is measured as the ratio of non-current assets other than plant, property and equipment to total assets.

AQI=(1 - (CurrentAssets_t + PPE_t) / TotalAssets_t) / (1 - (CurrentAssets_t-1 + PPE_t-1) / TotalAssets_t-1)
=(1 - (308.948 + 18.41) / 387.456) / (1 - (329.63 + 14.313) / 389.491)
=0.15510923 / 0.11694237
=1.3264

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.

SGI=Sales_t / Sales_t-1
=Revenue_t / Revenue_t-1
=224.254 / 265.812
=0.8437

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))
=(6.545 / (6.545 + 14.313)) / (6.715 / (6.715 + 18.41))
=0.31378847 / 0.26726368
=1.1741

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)
=(56.613 / 224.254) / (58.924 / 265.812)
=0.25245035 / 0.22167547
=1.1388

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)
=((0.218 + 37.968) / 387.456) / ((0.388 + 32.87) / 389.491)
=0.09855571 / 0.08538837
=1.1542

8. TATA = Total Accruals to Total Assets

Total accruals calculated as the change in working capital accounts other than cash less depreciation.

TATA=(IncomefromContinuingOperations_t - CashFlowsfromOperations_t) / TotalAssets_t
=(NetIncome_t - NonOperatingIncome_t - CashFlowsfromOperations_t) / TotalAssets_t
=(-12.633 - -0.379 - -8.174) / 387.456
=-0.0105

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 -2.74 suggests that the company will not be a manipulator.


Related Terms

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


Historical Data

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

AeroVironment Inc Annual Data

Apr07Apr08Apr09Apr10Apr11Apr12Apr13Apr14Apr15Apr16
DSRI 1.03781.18660.73580.90140.97951.14420.47421.53171.02741.638
GMI 1.03321.08281.01770.92190.96891.00651.03271.0360.92530.947
AQI 0.15652.73973.7441.08040.8433.62161.15150.74030.91580.7744
SGI 1.24661.24191.14791.00751.17231.11110.73891.04811.03061.0181
DEPI 0.77771.16761.19680.73360.82091.36580.89310.98470.82081.4385
SGAI 0.77731.12740.88621.22970.95361.04891.26131.03110.97181.0582
LVGI 0.43010.85290.96411.02521.19660.91310.68250.84021.19950.9697
TATA 0.03390.0289-0.0613-0.0541-0.02280.0317-0.0693-0.0569-0.08940.0271
M-score -2.19-1.17-1.71-2.90-2.61-0.98-3.40-2.25-3.00-1.82

AeroVironment Inc Quarterly Data

Oct14Jan15Apr15Jul15Oct15Jan16Apr16Jul16Oct16Jan17
DSRI 0.72950.83691.02741.23831.27460.95541.6381.16310.68230.7029
GMI 0.97440.96710.92530.87860.80160.80370.9471.02851.21051.2393
AQI 0.88791.08220.91581.0950.79510.74790.77440.92331.26491.3264
SGI 1.17641.06071.03060.98121.07851.07871.01810.99480.8950.8437
DEPI 0.77180.79030.82080.92061.03551.1181.43851.35111.20451.1741
SGAI 0.96411.01580.97181.0370.95770.95651.05821.02031.08431.1388
LVGI 1.17951.15191.19951.08790.74240.75580.96970.97171.22391.1542
TATA -0.1311-0.1197-0.0894-0.02320.0165-0.00590.0271-0.0146-0.0537-0.0105
M-score -3.32-3.20-3.00-2.46-2.17-2.58-1.82-2.37-2.96-2.74
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