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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.
Spirit Airlines Inc has a M-score of -2.28 suggests that the company is not a manipulator.
During the past 6 years, the highest Beneish M-Score of Spirit Airlines Inc was -1.93. The lowest was -2.52. And the median was -2.33.
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 Spirit Airlines Inc 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 * 0.9119||+||0.528 * 0.8678||+||0.404 * 1.2784||+||0.892 * 1.2524||+||0.115 * 0.5659|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9572||+||4.679 * 0.0024||-||0.327 * 0.8636|
|This Year (Jun14) TTM:||Last Year (Jun13) TTM:|
|Accounts Receivable was $37 Mil.|
Revenue was 499.337 + 437.987 + 419.984 + 456.625 = $1,814 Mil.
Gross Profit was 251.227 + 201.499 + 197.176 + 230.491 = $880 Mil.
Total Current Assets was $688 Mil.
Total Assets was $1,350 Mil.
Property, Plant and Equipment(Net PPE) was $38 Mil.
Depreciation, Depletion and Amortization(DDA) was $54 Mil.
Selling, General & Admin. Expense(SGA) was $639 Mil.
Total Current Liabilities was $401 Mil.
Long-Term Debt was $0 Mil.
Net Income was 64.849 + 37.706 + 43.193 + 61.103 = $207 Mil.
Non Operating Income was -1.439 + -0.037 + -0.031 + -0.115 = $-2 Mil.
Cash Flow from Operations was 53.496 + 90.639 + 21.745 + 39.371 = $205 Mil.
|Accounts Receivable was $33 Mil.
Revenue was 407.339 + 370.437 + 328.268 + 342.317 = $1,448 Mil.
Gross Profit was 193.625 + 226.991 + -16.667 + 206.09 = $610 Mil.
Total Current Assets was $677 Mil.
Total Assets was $1,107 Mil.
Property, Plant and Equipment(Net PPE) was $31 Mil.
Depreciation, Depletion and Amortization(DDA) was $15 Mil.
Selling, General & Admin. Expense(SGA) was $533 Mil.
Total Current Liabilities was $380 Mil.
Long-Term Debt was $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)|
|=||(37.467 / 1813.933)||/||(32.807 / 1448.361)|
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)|
|=||(201.499 / 1448.361)||/||(251.227 / 1813.933)|
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 - (688.461 + 37.993) / 1349.85)||/||(1 - (676.612 + 30.523) / 1107.061)|
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))|
|=||(15.256 / (15.256 + 30.523))||/||(54.412 / (54.412 + 37.993))|
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)|
|=||(638.545 / 1813.933)||/||(532.632 / 1448.361)|
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)|
|=||((0 + 400.538) / 1349.85)||/||((0 + 380.399) / 1107.061)|
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|
|=||(206.851 - -1.622||-||205.251)||/||1349.85|
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.
Spirit Airlines Inc has a M-score of -2.28 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
Spirit Airlines Inc Annual Data
Spirit Airlines Inc Quarterly Data