Switch to:
Southwest Airlines Co (NYSE:LUV)
Beneish M-Score
-2.67 (As of Today)

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.

Southwest Airlines Co has a M-score of -2.67 suggests that the company is not a manipulator.

LUV' s Beneish M-Score Range Over the Past 10 Years
Min: -3.36   Max: 168.65
Current: -2.67

-3.36
168.65

During the past 13 years, the highest Beneish M-Score of Southwest Airlines Co was 168.65. The lowest was -3.36. And the median was -2.68.


Definition

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 Southwest Airlines Co 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 * 0.9542+0.528 * 0.8803+0.404 * 1.0172+0.892 * 1.0731+0.115 * 0.9896
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0864+4.679 * -0.0237-0.327 * 1.0831
=-2.67

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.

This Year (Mar16) TTM:Last Year (Mar15) TTM:
Accounts Receivable was $511 Mil.
Revenue was 4826 + 4977 + 5318 + 5111 = $20,232 Mil.
Gross Profit was 3351 + 3565 + 3760 + 3508 = $14,184 Mil.
Total Current Assets was $4,574 Mil.
Total Assets was $22,241 Mil.
Property, Plant and Equipment(Net PPE) was $15,964 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,062 Mil.
Selling, General & Admin. Expense(SGA) was $6,503 Mil.
Total Current Liabilities was $8,253 Mil.
Long-Term Debt was $2,355 Mil.
Net Income was 511 + 536 + 584 + 608 = $2,239 Mil.
Non Operating Income was -114 + -162 + -272 + -88 = $-636 Mil.
Cash Flow from Operations was 1616 + 324 + 836 + 627 = $3,403 Mil.
Accounts Receivable was $499 Mil.
Revenue was 4414 + 4628 + 4800 + 5011 = $18,853 Mil.
Gross Profit was 2963 + 2886 + 2806 + 2980 = $11,635 Mil.
Total Current Assets was $4,963 Mil.
Total Assets was $21,163 Mil.
Property, Plant and Equipment(Net PPE) was $14,607 Mil.
Depreciation, Depletion and Amortization(DDA) was $961 Mil.
Selling, General & Admin. Expense(SGA) was $5,578 Mil.
Total Current Liabilities was $6,903 Mil.
Long-Term Debt was $2,416 Mil.



1. DSRI = Days Sales in Receivables Index

Measured as the ratio of days’ sales in receivables in year t to year t-1.

A large increase in DSR could be indicative of revenue inflation.

DSRI=(Receivables_t / Revenue_t) / (Receivables_t-1 / Revenue_t-1)
=(511 / 20232) / (499 / 18853)
=0.02525702 / 0.02646794
=0.9542

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.

GMI=GrossMargin_t-1 / GrossMargin_t
=(GrossProfit_t-1 / Revenue_t-1) / (GrossProfit_t / Revenue_t)
=(11635 / 18853) / (14184 / 20232)
=0.61714316 / 0.70106762
=0.8803

3. AQI = Asset Quality Index

AQI is the ratio of asset quality in year t to year t-1.

Asset quality is measured as the ratio of non-current assets other than plant, property and equipment to total assets.

AQI=(1 - (CurrentAssets_t + PPE_t) / TotalAssets_t) / (1 - (CurrentAssets_t-1 + PPE_t-1) / TotalAssets_t-1)
=(1 - (4574 + 15964) / 22241) / (1 - (4963 + 14607) / 21163)
=0.0765703 / 0.07527288
=1.0172

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.

SGI=Sales_t / Sales_t-1
=Revenue_t / Revenue_t-1
=20232 / 18853
=1.0731

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))
=(961 / (961 + 14607)) / (1062 / (1062 + 15964))
=0.06172919 / 0.06237519
=0.9896

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)
=(6503 / 20232) / (5578 / 18853)
=0.32142151 / 0.29586803
=1.0864

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)
=((2355 + 8253) / 22241) / ((2416 + 6903) / 21163)
=0.47695697 / 0.440344
=1.0831

8. TATA = Total Accruals to Total Assets

Total accruals calculated as the change in working capital accounts other than cash less depreciation.

TATA=(IncomefromContinuingOperations_t - CashFlowsfromOperations_t) / TotalAssets_t
=(NetIncome_t - NonOperatingIncome_t - CashFlowsfromOperations_t) / TotalAssets_t
=(2239 - -636 - 3403) / 22241
=-0.0237

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.

Southwest Airlines Co has a M-score of -2.67 suggests that the company will not be a manipulator.


Related Terms

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


Historical Data

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.

Southwest Airlines Co Annual Data

Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15
DSRI 0.77971.06670.67010.86120.98661.18531.01741.21850.82871.219
GMI 1.05051.08670.6520.82591.29861.121.00780.93050.90340.8439
AQI 0.67961.52640.30730.72832.01882.25390.97590.89950.98351.038
SGI 1.1981.08531.11780.93891.16951.29361.09131.03581.05121.0653
DEPI 0.9980.99970.94360.93990.97711.00660.89781.01970.98751.0082
SGAI 0.93180.97710.76051.10580.91330.91220.99561.02361.02671.1026
LVGI 0.8841.24111.09110.93850.95031.10110.96650.95621.0661.0945
TATA -0.06-0.15160.1273-0.0659-0.0644-0.0558-0.0981-0.0907-0.0739-0.0235
M-score -2.84-2.87-2.54-3.18-2.04-1.76-2.85-2.74-3.02-2.44

Southwest Airlines Co Quarterly Data

Dec13Mar14Jun14Sep14Dec14Mar15Jun15Sep15Dec15Mar16
DSRI 1.21851.02930.82460.95810.82871.02990.98980.93921.2190.9542
GMI 0.93040.91470.89660.89910.90350.88120.87240.84890.84380.8803
AQI 0.89951.0781.26561.07930.98350.86320.86891.01221.0381.0172
SGI 1.03581.03491.05471.0551.05111.06021.04421.05791.06531.0731
DEPI 1.01860.99241.00731.00730.98850.99580.98550.97281.00730.9896
SGAI 0.91770.84560.83710.68121.25611.13611.16781.34451.00531.0864
LVGI 0.95621.0511.03451.01341.0660.99070.97711.04731.09451.0831
TATA -0.0908-0.0904-0.1038-0.087-0.0738-0.0663-0.022-0.0283-0.0236-0.0237
M-score -2.72-2.85-3.01-2.85-3.06-2.85-2.70-2.77-2.43-2.67
Get WordPress Plugins for easy affiliate links on Stock Tickers and Guru Names | Earn affiliate commissions by embedding GuruFocus Charts
GuruFocus Affiliate Program: Earn up to $400 per referral. ( Learn More)
FEEDBACK