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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 -3.78. And the median was -2.54.
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 * 1.0768||+||0.528 * 0.9947||+||0.404 * 1.1853||+||0.892 * 1.1946||+||0.115 * 0.8087|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0408||+||4.679 * -0.0328||-||0.327 * 3.0376|
* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.
|This Year (Mar15) TTM:||Last Year (Mar14) TTM:|
|Accounts Receivable was $120.5 Mil.|
Revenue was 205.918 + 214.062 + 201.477 + 193.852 = $815.3 Mil.
Gross Profit was 91.675 + 102.854 + 98.341 + 94.577 = $387.4 Mil.
Total Current Assets was $196.7 Mil.
Total Assets was $715.4 Mil.
Property, Plant and Equipment(Net PPE) was $172.5 Mil.
Depreciation, Depletion and Amortization(DDA) was $32.8 Mil.
Selling, General & Admin. Expense(SGA) was $252.7 Mil.
Total Current Liabilities was $114.0 Mil.
Long-Term Debt was $70.9 Mil.
Net Income was 4.837 + 17.046 + 16.744 + 17.178 = $55.8 Mil.
Non Operating Income was -0.048 + 0.145 + -0.055 + 0.112 = $0.2 Mil.
Cash Flow from Operations was 7.459 + 26.567 + 25.878 + 19.183 = $79.1 Mil.
|Accounts Receivable was $93.7 Mil.
Revenue was 171.569 + 181.085 + 170.033 + 159.804 = $682.5 Mil.
Gross Profit was 80.734 + 85.405 + 80.67 + 75.792 = $322.6 Mil.
Total Current Assets was $145.1 Mil.
Total Assets was $534.6 Mil.
Property, Plant and Equipment(Net PPE) was $171.2 Mil.
Depreciation, Depletion and Amortization(DDA) was $25.4 Mil.
Selling, General & Admin. Expense(SGA) was $203.3 Mil.
Total Current Liabilities was $44.0 Mil.
Long-Term Debt was $1.5 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)|
|=||(120.473 / 815.309)||/||(93.651 / 682.491)|
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)|
|=||(102.854 / 682.491)||/||(91.675 / 815.309)|
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 - (196.735 + 172.527) / 715.387)||/||(1 - (145.125 + 171.229) / 534.567)|
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))|
|=||(25.406 / (25.406 + 171.229))||/||(32.804 / (32.804 + 172.527))|
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)|
|=||(252.724 / 815.309)||/||(203.27 / 682.491)|
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)|
|=||((70.897 + 114.013) / 715.387)||/||((1.477 + 44.011) / 534.567)|
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|
|=||(55.805 - 0.154||-||79.087)||/||715.387|
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 -3.01 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