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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 -3.18. 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 * 1.0411||+||0.528 * 0.9846||+||0.404 * 1.5629||+||0.892 * 1.1969||+||0.115 * 0.8647|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0035||+||4.679 * -0.0568||-||0.327 * 1.2068|
|This Year (Dec14) TTM:||Last Year (Dec13) TTM:|
|Accounts Receivable was $95.3 Mil.|
Revenue was 214.062 + 201.477 + 193.852 + 171.569 = $781.0 Mil.
Gross Profit was 102.854 + 98.341 + 94.577 + 80.734 = $376.5 Mil.
Total Current Assets was $150.0 Mil.
Total Assets was $541.8 Mil.
Property, Plant and Equipment(Net PPE) was $172.5 Mil.
Depreciation, Depletion and Amortization(DDA) was $31.1 Mil.
Selling, General & Admin. Expense(SGA) was $231.8 Mil.
Total Current Liabilities was $43.4 Mil.
Long-Term Debt was $1.3 Mil.
Net Income was 17.046 + 16.744 + 17.178 + 10.202 = $61.2 Mil.
Non Operating Income was 0.145 + -0.055 + 0.112 + 0.086 = $0.3 Mil.
Cash Flow from Operations was 26.567 + 25.878 + 19.183 + 20.032 = $91.7 Mil.
|Accounts Receivable was $76.5 Mil.
Revenue was 181.085 + 170.033 + 159.804 + 141.56 = $652.5 Mil.
Gross Profit was 85.405 + 80.67 + 75.792 + 67.849 = $309.7 Mil.
Total Current Assets was $220.4 Mil.
Total Assets was $506.3 Mil.
Property, Plant and Equipment(Net PPE) was $154.8 Mil.
Depreciation, Depletion and Amortization(DDA) was $23.6 Mil.
Selling, General & Admin. Expense(SGA) was $193.0 Mil.
Total Current Liabilities was $34.6 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)|
|=||(95.326 / 780.96)||/||(76.5 / 652.482)|
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)|
|=||(98.341 / 652.482)||/||(102.854 / 780.96)|
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 - (149.955 + 172.489) / 541.805)||/||(1 - (220.36 + 154.763) / 506.269)|
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))|
|=||(23.579 / (23.579 + 154.763))||/||(31.133 / (31.133 + 172.489))|
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)|
|=||(231.835 / 780.96)||/||(193.026 / 652.482)|
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)|
|=||((1.275 + 43.431) / 541.805)||/||((0.003 + 34.611) / 506.269)|
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|
|=||(61.17 - 0.288||-||91.66)||/||541.805|
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 -2.40 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