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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 * 1.0073||+||0.528 * 1.002||+||0.404 * 1.5005||+||0.892 * 1.1931||+||0.115 * 0.8817|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9907||+||4.679 * -0.0678||-||0.327 * 1.1718|
* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.
|This Year (Sep14) TTM:||Last Year (Sep13) TTM:|
|Accounts Receivable was $100.0 Mil.|
Revenue was 201.477 + 193.852 + 171.569 + 181.085 = $748.0 Mil.
Gross Profit was 98.341 + 94.577 + 80.734 + 85.405 = $359.1 Mil.
Total Current Assets was $138.6 Mil.
Total Assets was $529.9 Mil.
Property, Plant and Equipment(Net PPE) was $176.5 Mil.
Depreciation, Depletion and Amortization(DDA) was $29.1 Mil.
Selling, General & Admin. Expense(SGA) was $221.3 Mil.
Total Current Liabilities was $45.0 Mil.
Long-Term Debt was $1.3 Mil.
Net Income was 16.744 + 17.178 + 10.202 + 15.585 = $59.7 Mil.
Non Operating Income was -0.055 + 0.112 + 0.086 + 0.027 = $0.2 Mil.
Cash Flow from Operations was 25.878 + 19.183 + 20.032 + 30.352 = $95.4 Mil.
|Accounts Receivable was $83.2 Mil.
Revenue was 170.033 + 159.804 + 141.56 + 155.525 = $626.9 Mil.
Gross Profit was 80.67 + 75.792 + 67.849 + 77.241 = $301.6 Mil.
Total Current Assets was $200.6 Mil.
Total Assets was $490.8 Mil.
Property, Plant and Equipment(Net PPE) was $157.6 Mil.
Depreciation, Depletion and Amortization(DDA) was $22.5 Mil.
Selling, General & Admin. Expense(SGA) was $187.2 Mil.
Total Current Liabilities was $36.6 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)|
|=||(100.016 / 747.983)||/||(83.224 / 626.922)|
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)|
|=||(94.577 / 626.922)||/||(98.341 / 747.983)|
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 - (138.646 + 176.496) / 529.945)||/||(1 - (200.624 + 157.599) / 490.802)|
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))|
|=||(22.458 / (22.458 + 157.599))||/||(29.081 / (29.081 + 176.496))|
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)|
|=||(221.251 / 747.983)||/||(187.174 / 626.922)|
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)|
|=||((1.346 + 45.031) / 529.945)||/||((0.004 + 36.649) / 490.802)|
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|
|=||(59.709 - 0.17||-||95.445)||/||529.945|
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 -2.48 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