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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.
Aircastle Ltd has a M-score of -2.86 suggests that the company is not a manipulator.
During the past 10 years, the highest Beneish M-Score of Aircastle Ltd was 2.31. The lowest was -3.66. And the median was -2.51.
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 * 0.9125||+||0.528 * 0.9878||+||0.404 * 0.8464||+||0.892 * 1.0988||+||0.115 * 1.14|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.998||+||4.679 * -0.0716||-||0.327 * 1.0138|
|This Year (Jun14) TTM:||Last Year (Jun13) TTM:|
|Accounts Receivable was $6.0 Mil.|
Revenue was 226.146 + 176.603 + 191.988 + 170.09 = $764.8 Mil.
Gross Profit was 223.5 + 174.74 + 189.821 + 168.176 = $756.2 Mil.
Total Current Assets was $359.9 Mil.
Total Assets was $6,211.6 Mil.
Property, Plant and Equipment(Net PPE) was $5,578.0 Mil.
Depreciation, Depletion and Amortization(DDA) was $292.7 Mil.
Selling, General & Admin. Expense(SGA) was $55.0 Mil.
Total Current Liabilities was $183.9 Mil.
Long-Term Debt was $3,752.5 Mil.
Net Income was 3.136 + 5.777 + 48.421 + -74.558 = $-17.2 Mil.
Non Operating Income was -35.686 + 1.867 + 12.735 + 3.947 = $-17.1 Mil.
Cash Flow from Operations was 111.014 + 102.991 + 104.724 + 125.874 = $444.6 Mil.
|Accounts Receivable was $6.0 Mil.
Revenue was 170.378 + 176.189 + 176.61 + 172.866 = $696.0 Mil.
Gross Profit was 164.24 + 172.777 + 173.897 + 168.94 = $679.9 Mil.
Total Current Assets was $736.9 Mil.
Total Assets was $5,684.3 Mil.
Property, Plant and Equipment(Net PPE) was $4,651.6 Mil.
Depreciation, Depletion and Amortization(DDA) was $280.3 Mil.
Selling, General & Admin. Expense(SGA) was $50.1 Mil.
Total Current Liabilities was $3,553.3 Mil.
Long-Term Debt was $0.0 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)|
|=||(6.041 / 764.827)||/||(6.025 / 696.043)|
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)|
|=||(174.74 / 696.043)||/||(223.5 / 764.827)|
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 - (359.931 + 5577.966) / 6211.567)||/||(1 - (736.901 + 4651.553) / 5684.343)|
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))|
|=||(280.288 / (280.288 + 4651.553))||/||(292.656 / (292.656 + 5577.966))|
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)|
|=||(54.97 / 764.827)||/||(50.128 / 696.043)|
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)|
|=||((3752.493 + 183.89) / 6211.567)||/||((0 + 3553.284) / 5684.343)|
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|
|=||(-17.224 - -17.137||-||444.603)||/||6211.567|
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 -2.86 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