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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 -2.53 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 -3.68. And the median was -2.56.
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 * 1.0348||+||0.528 * 1.0231||+||0.404 * 1.3486||+||0.892 * 1.1589||+||0.115 * 0.9731|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.003||+||4.679 * -0.0685||-||0.327 * 1.1634|
|This Year (Mar14) TTM:||Last Year (Mar13) TTM:|
|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.
Net Income was 10.202 + 15.585 + 14.197 + 13.831 = $53.8 Mil.
Non Operating Income was 0.086 + 0.027 + 0.027 + 0.014 = $0.2 Mil.
Cash Flow from Operations was 20.032 + 30.352 + 23.237 + 16.646 = $90.3 Mil.
|Accounts Receivable was $78.1 Mil.
Revenue was 141.56 + 155.525 + 143.514 + 148.326 = $588.9 Mil.
Gross Profit was 67.849 + 77.241 + 68.101 + 71.611 = $284.8 Mil.
Total Current Assets was $164.5 Mil.
Total Assets was $446.2 Mil.
Property, Plant and Equipment(Net PPE) was $146.6 Mil.
Depreciation, Depletion and Amortization(DDA) was $21.1 Mil.
Selling, General & Admin. Expense(SGA) was $174.9 Mil.
Total Current Liabilities was $32.6 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)|
|=||(93.651 / 682.491)||/||(78.092 / 588.925)|
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)|
|=||(85.405 / 588.925)||/||(80.734 / 682.491)|
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 - (145.125 + 171.229) / 534.567)||/||(1 - (164.518 + 146.627) / 446.206)|
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))|
|=||(21.086 / (21.086 + 146.627))||/||(25.406 / (25.406 + 171.229))|
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)|
|=||(203.27 / 682.491)||/||(174.881 / 588.925)|
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)|
|=||((1.477 + 44.011) / 534.567)||/||((0.037 + 32.598) / 446.206)|
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|
|=||(53.815 - 0.154||-||90.267)||/||534.567|
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 -2.53 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