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GuruFocus has detected 5 Warning Signs with Forward Air Corp $FWRD.
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Forward Air Corp (NAS:FWRD)
Beneish M-Score
-3.05 (As of Today)

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.

Forward Air Corp has a M-score of -3.05 suggests that the company is not a manipulator.

FWRD' s Beneish M-Score Range Over the Past 10 Years
Min: -3.31   Max: 47.03
Current: -3.05

-3.31
47.03

During the past 13 years, the highest Beneish M-Score of Forward Air Corp was 47.03. The lowest was -3.31. And the median was -2.70.


Definition

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 * 1.0427+0.528 * 0.9825+0.404 * 0.9808+0.892 * 1.0244+0.115 * 1.033
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9693+4.679 * -0.1601-0.327 * 0.6236
=-3.05

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

This Year (Dec16) TTM:Last Year (Dec15) TTM:
Accounts Receivable was $116.6 Mil.
Revenue was 264.793 + 249.552 + 238.637 + 229.549 = $982.5 Mil.
Gross Profit was 126.376 + 117.712 + 136.371 + 110.849 = $491.3 Mil.
Total Current Assets was $136.3 Mil.
Total Assets was $641.3 Mil.
Property, Plant and Equipment(Net PPE) was $200.2 Mil.
Depreciation, Depletion and Amortization(DDA) was $38.2 Mil.
Selling, General & Admin. Expense(SGA) was $263.3 Mil.
Total Current Liabilities was $77.9 Mil.
Long-Term Debt was $0.7 Mil.
Net Income was 12.706 + 11.931 + -10.066 + 13.099 = $27.7 Mil.
Non Operating Income was 0.153 + -0.004 + -0.117 + -0.029 = $0.0 Mil.
Cash Flow from Operations was 35.742 + 33.402 + 23.765 + 37.441 = $130.4 Mil.
Accounts Receivable was $109.2 Mil.
Revenue was 256.42 + 247.093 + 249.694 + 205.918 = $959.1 Mil.
Gross Profit was 124.916 + 116.6 + 138.024 + 91.675 = $471.2 Mil.
Total Current Assets was $173.5 Mil.
Total Assets was $699.9 Mil.
Property, Plant and Equipment(Net PPE) was $187.3 Mil.
Depreciation, Depletion and Amortization(DDA) was $37.2 Mil.
Selling, General & Admin. Expense(SGA) was $265.1 Mil.
Total Current Liabilities was $109.0 Mil.
Long-Term Debt was $28.6 Mil.



1. DSRI = Days Sales in Receivables Index

Measured as the ratio of days’ sales in receivables in year t to year t-1.

A large increase in DSR could be indicative of revenue inflation.

DSRI=(Receivables_t / Revenue_t) / (Receivables_t-1 / Revenue_t-1)
=(116.602 / 982.531) / (109.165 / 959.125)
=0.11867514 / 0.11381728
=1.0427

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.

GMI=GrossMargin_t-1 / GrossMargin_t
=(GrossProfit_t-1 / Revenue_t-1) / (GrossProfit_t / Revenue_t)
=(471.215 / 959.125) / (491.308 / 982.531)
=0.49129675 / 0.50004326
=0.9825

3. AQI = Asset Quality Index

AQI is the ratio of asset quality in year t to year t-1.

Asset quality is measured as the ratio of non-current assets other than plant, property and equipment to total assets.

AQI=(1 - (CurrentAssets_t + PPE_t) / TotalAssets_t) / (1 - (CurrentAssets_t-1 + PPE_t-1) / TotalAssets_t-1)
=(1 - (136.27 + 200.205) / 641.291) / (1 - (173.457 + 187.288) / 699.932)
=0.4753162 / 0.48459993
=0.9808

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.

SGI=Sales_t / Sales_t-1
=Revenue_t / Revenue_t-1
=982.531 / 959.125
=1.0244

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))
=(37.157 / (37.157 + 187.288)) / (38.21 / (38.21 + 200.205))
=0.16555058 / 0.16026676
=1.033

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)
=(263.251 / 982.531) / (265.12 / 959.125)
=0.2679315 / 0.27641861
=0.9693

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)
=((0.725 + 77.927) / 641.291) / ((28.617 + 109.044) / 699.932)
=0.12264635 / 0.19667768
=0.6236

8. TATA = Total Accruals to Total Assets

Total accruals calculated as the change in working capital accounts other than cash less depreciation.

TATA=(IncomefromContinuingOperations_t - CashFlowsfromOperations_t) / TotalAssets_t
=(NetIncome_t - NonOperatingIncome_t - CashFlowsfromOperations_t) / TotalAssets_t
=(27.67 - 0.003 - 130.35) / 641.291
=-0.1601

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 -3.05 suggests that the company will not be a manipulator.


Related Terms

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


Historical Data

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

Forward Air Corp Annual Data

Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15Dec16
DSRI 1.10660.79281.10710.97151.01950.9740.91051.04110.93241.0427
GMI 0.70620.9871.35690.84031.00151.02751.02131.11791.03520.9735
AQI 1.84711.08480.84370.85890.95770.80291.5381.57021.19140.9808
SGI 1.11331.2080.87981.15941.10841.08961.11641.19691.22811.0244
DEPI 1.50970.79870.89590.95421.00051.02331.02860.86470.92361.033
SGAI 1.07141.0861.15911.18910.91750.96040.99190.78821.07580.9819
LVGI 2.57641.06841.00470.86970.44630.69780.97551.21242.37260.6236
TATA -0.0795-0.055-0.1277-0.0632-0.0875-0.0399-0.072-0.0571-0.043-0.1601
M-score -2.93-2.78-3.00-2.80-2.60-2.57-2.55-2.29-2.91-3.06

Forward Air Corp Quarterly Data

Sep14Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16Dec16
DSRI 1.00731.04111.07681.03160.93550.93250.71840.80050.94641.0427
GMI 1.00281.11791.17021.15641.20710.98130.92170.92920.89620.9825
AQI 1.50051.57021.18531.19171.20231.19141.01490.93930.96070.9808
SGI 1.19311.19691.19461.21581.22571.22811.20541.11541.06261.0244
DEPI 0.88170.86470.80870.7910.8220.92360.92530.99151.06611.033
SGAI 0.99070.78820.74990.82270.78911.18541.22951.10251.15620.9693
LVGI 1.17181.21243.03762.8912.5492.37260.67110.64440.64250.6236
TATA -0.0678-0.0571-0.0328-0.0289-0.0494-0.043-0.0752-0.134-0.1321-0.1601
M-score -2.48-2.29-2.87-2.85-2.87-2.96-2.88-3.15-3.06-3.05
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