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GuruFocus has detected 3 Warning Signs with AeroVironment Inc $AVAV.
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AeroVironment Inc (NAS:AVAV)
Beneish M-Score
-2.96 (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 -2.96 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: -2.96

-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 -2.39.


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 * 0.6823+0.528 * 1.2105+0.404 * 1.2649+0.892 * 0.895+0.115 * 1.2045
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0843+4.679 * -0.0537-0.327 * 1.2239
=-2.96

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

This Year (Oct16) TTM:Last Year (Oct15) TTM:
Accounts Receivable was $26.1 Mil.
Revenue was 50.116 + 36.218 + 84.757 + 67.56 = $238.7 Mil.
Gross Profit was 17.417 + 6.683 + 37.922 + 26.625 = $88.6 Mil.
Total Current Assets was $313.9 Mil.
Total Assets was $389.9 Mil.
Property, Plant and Equipment(Net PPE) was $17.4 Mil.
Depreciation, Depletion and Amortization(DDA) was $6.7 Mil.
Selling, General & Admin. Expense(SGA) was $57.1 Mil.
Total Current Liabilities was $39.4 Mil.
Long-Term Debt was $0.3 Mil.
Net Income was -4.172 + -11.642 + 5.364 + 6.164 = $-4.3 Mil.
Non Operating Income was -0.13 + -0.3 + 0.097 + -0.215 = $-0.5 Mil.
Cash Flow from Operations was -5.036 + -1.243 + 6.25 + 17.21 = $17.2 Mil.
Accounts Receivable was $42.7 Mil.
Revenue was 64.731 + 47.05 + 86.471 + 68.397 = $266.6 Mil.
Gross Profit was 31.533 + 16.023 + 45.35 + 26.993 = $119.9 Mil.
Total Current Assets was $321.3 Mil.
Total Assets was $380.0 Mil.
Property, Plant and Equipment(Net PPE) was $13.6 Mil.
Depreciation, Depletion and Amortization(DDA) was $6.8 Mil.
Selling, General & Admin. Expense(SGA) was $58.9 Mil.
Total Current Liabilities was $31.6 Mil.
Long-Term Debt was $0.0 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)
=(26.102 / 238.651) / (42.746 / 266.649)
=0.1093731 / 0.16030812
=0.6823

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)
=(119.899 / 266.649) / (88.647 / 238.651)
=0.44965104 / 0.37145036
=1.2105

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 - (313.887 + 17.445) / 389.898) / (1 - (321.32 + 13.579) / 380.029)
=0.15020852 / 0.1187541
=1.2649

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
=238.651 / 266.649
=0.895

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))
=(6.828 / (6.828 + 13.579)) / (6.71 / (6.71 + 17.445))
=0.33459107 / 0.27778928
=1.2045

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)
=(57.138 / 238.651) / (58.879 / 266.649)
=0.23942074 / 0.22081088
=1.0843

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)
=((0.276 + 39.4) / 389.898) / ((0 + 31.597) / 380.029)
=0.10175995 / 0.08314365
=1.2239

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
=(-4.286 - -0.548 - 17.181) / 389.898
=-0.0537

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 -2.96 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

Jul14Oct14Jan15Apr15Jul15Oct15Jan16Apr16Jul16Oct16
DSRI 1.02960.72950.83691.02741.23831.27460.95541.6381.16310.6823
GMI 1.03470.97440.96710.92530.87860.80160.80370.9471.02851.2105
AQI 0.58730.88791.08220.91581.0950.79510.74790.77440.92331.2649
SGI 1.15011.17641.06071.03060.98121.07851.07871.01810.99480.895
DEPI 0.81530.77180.79030.82080.92061.03551.1181.43851.35111.2045
SGAI 0.97770.96411.01580.97181.0370.95770.95651.05821.02031.0843
LVGI 0.83271.17951.15191.19951.08790.74240.75580.96970.97171.2239
TATA -0.1352-0.1311-0.1197-0.0894-0.02320.0165-0.00590.0271-0.0146-0.0537
M-score -3.06-3.32-3.20-3.00-2.46-2.17-2.58-1.82-2.37-2.96
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