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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 47.04. The lowest was -3.31. And the median was -2.62.
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|
|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
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)|
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)|
|=||(471.215 / 959.125)||/||(491.308 / 982.531)|
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 - (136.27 + 200.205) / 641.291)||/||(1 - (173.457 + 187.288) / 699.932)|
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))|
|=||(37.157 / (37.157 + 187.288))||/||(38.21 / (38.21 + 200.205))|
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)|
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)|
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|
|=||(27.67 - 0.003||-||130.35)||/||641.291|
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.
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