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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 JetBlue Airways Corp was -1.38. The lowest was -3.55. And the median was -2.78.
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 JetBlue Airways 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 * 0.9404||+||0.528 * 0.8381||+||0.404 * 0.8833||+||0.892 * 1.0927||+||0.115 * 1.0305|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0253||+||4.679 * -0.1055||-||0.327 * 0.8931|
|This Year (Sep15) TTM:||Last Year (Sep14) TTM:|
|Accounts Receivable was $149 Mil.|
Revenue was 1687 + 1612 + 1523 + 1446 = $6,268 Mil.
Gross Profit was 1092 + 994 + 961 + 793 = $3,840 Mil.
Total Current Assets was $1,626 Mil.
Total Assets was $8,594 Mil.
Property, Plant and Equipment(Net PPE) was $6,360 Mil.
Depreciation, Depletion and Amortization(DDA) was $337 Mil.
Selling, General & Admin. Expense(SGA) was $2,178 Mil.
Total Current Liabilities was $2,225 Mil.
Long-Term Debt was $1,744 Mil.
Net Income was 198 + 152 + 137 + 88 = $575 Mil.
Non Operating Income was 0 + 0 + 0 + 0 = $0 Mil.
Cash Flow from Operations was 404 + 362 + 528 + 188 = $1,482 Mil.
|Accounts Receivable was $145 Mil.
Revenue was 1529 + 1493 + 1349 + 1365 = $5,736 Mil.
Gross Profit was 786 + 780 + 683 + 696 = $2,945 Mil.
Total Current Assets was $1,215 Mil.
Total Assets was $7,741 Mil.
Property, Plant and Equipment(Net PPE) was $5,906 Mil.
Depreciation, Depletion and Amortization(DDA) was $323 Mil.
Selling, General & Admin. Expense(SGA) was $1,944 Mil.
Total Current Liabilities was $1,915 Mil.
Long-Term Debt was $2,088 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)|
|=||(149 / 6268)||/||(145 / 5736)|
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)|
|=||(994 / 5736)||/||(1092 / 6268)|
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 - (1626 + 6360) / 8594)||/||(1 - (1215 + 5906) / 7741)|
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))|
|=||(323 / (323 + 5906))||/||(337 / (337 + 6360))|
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)|
|=||(2178 / 6268)||/||(1944 / 5736)|
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)|
|=||((1744 + 2225) / 8594)||/||((2088 + 1915) / 7741)|
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|
|=||(575 - 0||-||1482)||/||8594|
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.
JetBlue Airways Corp has a M-score of -3.04 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
JetBlue Airways Corp Annual Data
JetBlue Airways Corp Quarterly Data