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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 13 years, the highest Beneish M-Score of Forward Air Corp was 47.03. The lowest was -3.56. And the median was -2.61.
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 Forward Air Corp 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 * 0.8005||+||0.528 * 0.9596||+||0.404 * 0.9393||+||0.892 * 1.1154||+||0.115 * 0.9915|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0383||+||4.679 * -0.134||-||0.327 * 0.6444|
|This Year (Jun16) TTM:||Last Year (Jun15) TTM:|
|Accounts Receivable was $109.3 Mil.|
Revenue was 238.637 + 229.549 + 256.42 + 247.093 = $971.7 Mil.
Gross Profit was 136.371 + 110.849 + 145.035 + 138.833 = $531.1 Mil.
Total Current Assets was $163.6 Mil.
Total Assets was $644.4 Mil.
Property, Plant and Equipment(Net PPE) was $188.3 Mil.
Depreciation, Depletion and Amortization(DDA) was $38.0 Mil.
Selling, General & Admin. Expense(SGA) was $304.1 Mil.
Total Current Liabilities was $100.7 Mil.
Long-Term Debt was $0.9 Mil.
Net Income was -10.066 + 13.099 + 23.228 + 15.687 = $41.9 Mil.
Non Operating Income was -0.117 + -0.029 + 0.069 + 0.01 = $-0.1 Mil.
Cash Flow from Operations was 23.765 + 37.441 + 28.407 + 38.753 = $128.4 Mil.
|Accounts Receivable was $122.4 Mil.
Revenue was 249.694 + 205.918 + 214.062 + 201.477 = $871.2 Mil.
Gross Profit was 138.024 + 91.675 + 116.587 + 110.591 = $456.9 Mil.
Total Current Assets was $193.3 Mil.
Total Assets was $709.4 Mil.
Property, Plant and Equipment(Net PPE) was $173.2 Mil.
Depreciation, Depletion and Amortization(DDA) was $34.6 Mil.
Selling, General & Admin. Expense(SGA) was $262.6 Mil.
Total Current Liabilities was $116.7 Mil.
Long-Term Debt was $56.9 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)|
|=||(109.256 / 971.699)||/||(122.356 / 871.151)|
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)|
|=||(456.877 / 871.151)||/||(531.088 / 971.699)|
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 - (163.631 + 188.256) / 644.427)||/||(1 - (193.342 + 173.197) / 709.36)|
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))|
|=||(34.571 / (34.571 + 173.197))||/||(37.964 / (37.964 + 188.256))|
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)|
|=||(304.111 / 971.699)||/||(262.581 / 871.151)|
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)|
|=||((0.909 + 100.738) / 644.427)||/||((56.926 + 116.713) / 709.36)|
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|
|=||(41.948 - -0.067||-||128.366)||/||644.427|
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.
Forward Air Corp has a M-score of -3.12 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
Forward Air Corp Annual Data
Forward Air Corp Quarterly Data