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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 -0.99. The lowest was -3.36. And the median was -2.82.
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 * 2.5674||+||0.528 * 1.0053||+||0.404 * 1.3643||+||0.892 * 1.0007||+||0.115 * 0.9881|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0069||+||4.679 * -0.1049||-||0.327 * 1.0117|
|This Year (Dec15) TTM:||Last Year (Dec14) TTM:|
|Accounts Receivable was $8.6 Mil.|
Revenue was 208.267 + 212.074 + 204.565 + 194.296 = $819.2 Mil.
Gross Profit was 205.891 + 209.554 + 200.902 + 191.353 = $807.7 Mil.
Total Current Assets was $327.6 Mil.
Total Assets was $6,570.0 Mil.
Property, Plant and Equipment(Net PPE) was $5,867.1 Mil.
Depreciation, Depletion and Amortization(DDA) was $318.8 Mil.
Selling, General & Admin. Expense(SGA) was $56.2 Mil.
Total Current Liabilities was $198.4 Mil.
Long-Term Debt was $4,041.2 Mil.
Net Income was 50.641 + -13.989 + 41.808 + 43.269 = $121.7 Mil.
Non Operating Income was -168.502 + 76.13 + 195.926 + 180.78 = $284.3 Mil.
Cash Flow from Operations was 117.815 + 158.864 + 116.678 + 132.928 = $526.3 Mil.
|Accounts Receivable was $3.3 Mil.
Revenue was 238.257 + 177.596 + 226.146 + 176.603 = $818.6 Mil.
Gross Profit was 236.24 + 176.883 + 223.5 + 174.74 = $811.4 Mil.
Total Current Assets was $336.9 Mil.
Total Assets was $6,175.1 Mil.
Property, Plant and Equipment(Net PPE) was $5,579.7 Mil.
Depreciation, Depletion and Amortization(DDA) was $299.4 Mil.
Selling, General & Admin. Expense(SGA) was $55.8 Mil.
Total Current Liabilities was $194.1 Mil.
Long-Term Debt was $3,744.6 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)|
|=||(8.566 / 819.202)||/||(3.334 / 818.602)|
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)|
|=||(209.554 / 818.602)||/||(205.891 / 819.202)|
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 - (327.607 + 5867.062) / 6569.964)||/||(1 - (336.874 + 5579.718) / 6175.146)|
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))|
|=||(299.365 / (299.365 + 5579.718))||/||(318.783 / (318.783 + 5867.062))|
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)|
|=||(56.198 / 819.202)||/||(55.773 / 818.602)|
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)|
|=||((4041.156 + 198.385) / 6569.964)||/||((3744.587 + 194.079) / 6175.146)|
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|
|=||(121.729 - 284.334||-||526.285)||/||6569.964|
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 -1.38 signals that the company is likely to 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