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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 AeroVironment Inc was 1.50. The lowest was -3.53. And the median was -2.42.
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|
|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
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)|
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)|
|=||(119.531 / 265.812)||/||(81.373 / 224.254)|
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 - (308.948 + 18.41) / 387.456)||/||(1 - (329.63 + 14.313) / 389.491)|
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))|
|=||(6.545 / (6.545 + 14.313))||/||(6.715 / (6.715 + 18.41))|
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)|
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)|
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|
|=||(-12.633 - -0.379||-||-8.174)||/||387.456|
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.
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