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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.
Forward Air Corp has a M-score of -2.50 suggests that the company is not a 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 -2.55.
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 * 1.0717||+||0.528 * 1.0102||+||0.404 * 1.4229||+||0.892 * 1.1934||+||0.115 * 0.9189|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9938||+||4.679 * -0.0674||-||0.327 * 1.3414|
|This Year (Jun14) TTM:||Last Year (Jun13) TTM:|
|Accounts Receivable was $97.6 Mil.|
Revenue was 193.852 + 171.569 + 181.085 + 170.033 = $716.5 Mil.
Gross Profit was 94.577 + 80.734 + 85.405 + 80.67 = $341.4 Mil.
Total Current Assets was $137.2 Mil.
Total Assets was $532.5 Mil.
Property, Plant and Equipment(Net PPE) was $179.4 Mil.
Depreciation, Depletion and Amortization(DDA) was $27.2 Mil.
Selling, General & Admin. Expense(SGA) was $212.8 Mil.
Total Current Liabilities was $43.7 Mil.
Long-Term Debt was $1.4 Mil.
Net Income was 17.178 + 10.202 + 15.585 + 14.197 = $57.2 Mil.
Non Operating Income was 0.112 + 0.086 + 0.027 + 0.027 = $0.3 Mil.
Cash Flow from Operations was 19.183 + 20.032 + 30.352 + 23.237 = $92.8 Mil.
|Accounts Receivable was $76.3 Mil.
Revenue was 159.804 + 141.56 + 155.525 + 143.514 = $600.4 Mil.
Gross Profit was 75.792 + 67.849 + 77.241 + 68.101 = $289.0 Mil.
Total Current Assets was $177.3 Mil.
Total Assets was $468.2 Mil.
Property, Plant and Equipment(Net PPE) was $157.5 Mil.
Depreciation, Depletion and Amortization(DDA) was $21.7 Mil.
Selling, General & Admin. Expense(SGA) was $179.4 Mil.
Total Current Liabilities was $29.5 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)|
|=||(97.56 / 716.539)||/||(76.28 / 600.403)|
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)|
|=||(80.734 / 600.403)||/||(94.577 / 716.539)|
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 - (137.158 + 179.381) / 532.489)||/||(1 - (177.281 + 157.465) / 468.192)|
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))|
|=||(21.663 / (21.663 + 157.465))||/||(27.186 / (27.186 + 179.381))|
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)|
|=||(212.796 / 716.539)||/||(179.419 / 600.403)|
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)|
|=||((1.415 + 43.671) / 532.489)||/||((0.023 + 29.53) / 468.192)|
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|
|=||(57.162 - 0.252||-||92.804)||/||532.489|
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 -2.50 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