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Beneish M-Score -0.83 higher than -2.22, which implies that it might have manipulated its financial results.
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 -2.60.
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 * 3.2026||+||0.528 * 1.0024||+||0.404 * 1.1925||+||0.892 * 0.9668||+||0.115 * 0.9158|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0713||+||4.679 * -0.0866||-||0.327 * 1.0024|
|This Year (Mar16) TTM:||Last Year (Mar15) TTM:|
|Accounts Receivable was $7.4 Mil.|
Revenue was 183.665 + 208.267 + 212.074 + 204.565 = $808.6 Mil.
Gross Profit was 182.262 + 205.891 + 209.554 + 200.902 = $798.6 Mil.
Total Current Assets was $743.5 Mil.
Total Assets was $6,702.8 Mil.
Property, Plant and Equipment(Net PPE) was $5,558.7 Mil.
Depreciation, Depletion and Amortization(DDA) was $320.6 Mil.
Selling, General & Admin. Expense(SGA) was $57.8 Mil.
Total Current Liabilities was $196.4 Mil.
Long-Term Debt was $4,184.4 Mil.
Net Income was 36.262 + 50.641 + -13.989 + 41.808 = $114.7 Mil.
Non Operating Income was 77.001 + -168.502 + 76.13 + 195.926 = $180.6 Mil.
Cash Flow from Operations was 121.264 + 117.815 + 158.864 + 116.678 = $514.6 Mil.
|Accounts Receivable was $2.4 Mil.
Revenue was 194.296 + 238.257 + 177.596 + 226.146 = $836.3 Mil.
Gross Profit was 191.353 + 236.24 + 176.883 + 223.5 = $828.0 Mil.
Total Current Assets was $484.3 Mil.
Total Assets was $6,524.4 Mil.
Property, Plant and Equipment(Net PPE) was $5,713.0 Mil.
Depreciation, Depletion and Amortization(DDA) was $300.3 Mil.
Selling, General & Admin. Expense(SGA) was $55.8 Mil.
Total Current Liabilities was $210.5 Mil.
Long-Term Debt was $4,043.2 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)|
|=||(7.388 / 808.571)||/||(2.386 / 836.295)|
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)|
|=||(205.891 / 836.295)||/||(182.262 / 808.571)|
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 - (743.456 + 5558.666) / 6702.832)||/||(1 - (484.339 + 5712.95) / 6524.366)|
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))|
|=||(300.284 / (300.284 + 5712.95))||/||(320.584 / (320.584 + 5558.666))|
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)|
|=||(57.758 / 808.571)||/||(55.761 / 836.295)|
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)|
|=||((4184.38 + 196.36) / 6702.832)||/||((4043.237 + 210.475) / 6524.366)|
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|
|=||(114.722 - 180.555||-||514.621)||/||6702.832|
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 -0.83 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