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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 8 years, the highest Beneish M-Score of Spirit Airlines Inc was -2.07. The lowest was -2.98. And the median was -2.44.
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 * 1.0044||+||0.528 * 0.9169||+||0.404 * 0.7139||+||0.892 * 1.0798||+||0.115 * 1.2987|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.1269||+||4.679 * -0.0809||-||0.327 * 1.1027|
|This Year (Sep16) TTM:||Last Year (Sep15) TTM:|
|Accounts Receivable was $36 Mil.|
Revenue was 621.329 + 584.133 + 538.143 + 519.846 = $2,263 Mil.
Gross Profit was 380.33 + 360.506 + 344.212 + 311.406 = $1,396 Mil.
Total Current Assets was $1,103 Mil.
Total Assets was $3,130 Mil.
Property, Plant and Equipment(Net PPE) was $1,390 Mil.
Depreciation, Depletion and Amortization(DDA) was $96 Mil.
Selling, General & Admin. Expense(SGA) was $540 Mil.
Total Current Liabilities was $571 Mil.
Long-Term Debt was $895 Mil.
Net Income was 81.382 + 73.084 + 61.92 + 74.4 = $291 Mil.
Non Operating Income was -0.18 + -0.157 + -0.07 + 0.267 = $-0 Mil.
Cash Flow from Operations was 79.22 + 102.722 + 258.099 + 103.995 = $544 Mil.
|Accounts Receivable was $33 Mil.
Revenue was 574.841 + 553.421 + 493.355 + 474.487 = $2,096 Mil.
Gross Profit was 349.367 + 317.752 + 278.435 + 240.228 = $1,186 Mil.
Total Current Assets was $919 Mil.
Total Assets was $2,277 Mil.
Property, Plant and Equipment(Net PPE) was $710 Mil.
Depreciation, Depletion and Amortization(DDA) was $65 Mil.
Selling, General & Admin. Expense(SGA) was $444 Mil.
Total Current Liabilities was $467 Mil.
Long-Term Debt was $500 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)|
|=||(35.892 / 2263.451)||/||(33.094 / 2096.104)|
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)|
|=||(1185.782 / 2096.104)||/||(1396.454 / 2263.451)|
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 - (1103.499 + 1390.108) / 3129.625)||/||(1 - (918.572 + 710.218) / 2276.922)|
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))|
|=||(64.798 / (64.798 + 710.218))||/||(95.648 / (95.648 + 1390.108))|
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)|
|=||(540.411 / 2263.451)||/||(444.104 / 2096.104)|
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)|
|=||((894.809 + 570.921) / 3129.625)||/||((500.147 + 466.883) / 2276.922)|
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|
|=||(290.786 - -0.14||-||544.036)||/||3129.625|
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 -2.96 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