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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 Aircastle Ltd was 2.11. The lowest was -3.71. And the median was -2.65.
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 Aircastle Ltd 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 * 0.9242||+||0.528 * 0.9993||+||0.404 * 1.3591||+||0.892 * 0.9746||+||0.115 * 0.9391|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0636||+||4.679 * -0.0674||-||0.327 * 0.9813|
|This Year (Jun16) TTM:||Last Year (Jun15) TTM:|
|Accounts Receivable was $4.5 Mil.|
Revenue was 189.988 + 183.665 + 208.267 + 212.074 = $794.0 Mil.
Gross Profit was 187.721 + 182.262 + 205.891 + 209.554 = $785.4 Mil.
Total Current Assets was $549.2 Mil.
Total Assets was $6,945.9 Mil.
Property, Plant and Equipment(Net PPE) was $5,875.9 Mil.
Depreciation, Depletion and Amortization(DDA) was $318.3 Mil.
Selling, General & Admin. Expense(SGA) was $58.5 Mil.
Total Current Liabilities was $135.4 Mil.
Long-Term Debt was $4,362.8 Mil.
Net Income was 20.03 + 36.262 + 50.641 + -13.989 = $92.9 Mil.
Non Operating Income was 64.771 + 77.001 + -168.502 + 76.13 = $49.4 Mil.
Cash Flow from Operations was 113.433 + 121.264 + 117.815 + 158.864 = $511.4 Mil.
|Accounts Receivable was $5.0 Mil.
Revenue was 204.565 + 194.296 + 238.257 + 177.596 = $814.7 Mil.
Gross Profit was 200.902 + 191.353 + 236.24 + 176.883 = $805.4 Mil.
Total Current Assets was $474.8 Mil.
Total Assets was $6,803.7 Mil.
Property, Plant and Equipment(Net PPE) was $5,953.6 Mil.
Depreciation, Depletion and Amortization(DDA) was $301.9 Mil.
Selling, General & Admin. Expense(SGA) was $56.4 Mil.
Total Current Liabilities was $212.8 Mil.
Long-Term Debt was $4,277.4 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)|
|=||(4.5 / 793.994)||/||(4.996 / 814.714)|
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)|
|=||(805.378 / 814.714)||/||(785.428 / 793.994)|
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 - (549.151 + 5875.935) / 6945.875)||/||(1 - (474.791 + 5953.555) / 6803.675)|
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))|
|=||(301.868 / (301.868 + 5953.555))||/||(318.286 / (318.286 + 5875.935))|
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)|
|=||(58.465 / 793.994)||/||(56.403 / 814.714)|
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)|
|=||((4362.794 + 135.363) / 6945.875)||/||((4277.374 + 212.83) / 6803.675)|
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|
|=||(92.944 - 49.4||-||511.376)||/||6945.875|
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.
Aircastle Ltd has a M-score of -2.75 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
Aircastle Ltd Annual Data
Aircastle Ltd Quarterly Data