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GuruFocus has detected 4 Warning Signs with AECOM $ACM.
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AECOM (NYSE:ACM)
Beneish M-Score
-1.72 (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.

AECOM has a M-score of -1.72 signals that the company is a manipulator.

ACM' s Beneish M-Score Range Over the Past 10 Years
Min: -3.32   Max: 0.18
Current: -1.72

-3.32
0.18

During the past 13 years, the highest Beneish M-Score of AECOM was 0.18. The lowest was -3.32. And the median was -2.29.


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 AECOM 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 * 2.0306+0.528 * 0.9231+0.404 * 0.9893+0.892 * 0.9758+0.115 * 1.3408
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.1344+4.679 * -0.032-0.327 * 0.9736
=-1.72

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

This Year (Mar17) TTM:Last Year (Mar16) TTM:
Accounts Receivable was $4,709 Mil.
Revenue was 4427.198 + 4358.349 + 4323.096 + 4408.782 = $17,517 Mil.
Gross Profit was 168.444 + 169.973 + 147.179 + 171.343 = $657 Mil.
Total Current Assets was $6,166 Mil.
Total Assets was $13,641 Mil.
Property, Plant and Equipment(Net PPE) was $619 Mil.
Depreciation, Depletion and Amortization(DDA) was $319 Mil.
Selling, General & Admin. Expense(SGA) was $119 Mil.
Total Current Liabilities was $5,064 Mil.
Long-Term Debt was $3,851 Mil.
Net Income was 102.396 + 47.179 + 7.204 + 67.444 = $224 Mil.
Non Operating Income was 1.241 + 0.86 + 2.894 + 1.498 = $6 Mil.
Cash Flow from Operations was -46.087 + 77.507 + 362.899 + 260.05 = $654 Mil.
Accounts Receivable was $2,377 Mil.
Revenue was 4381.296 + 4297.651 + 4723.637 + 4549.578 = $17,952 Mil.
Gross Profit was 183.444 + 140.858 + 170.628 + 126.518 = $621 Mil.
Total Current Assets was $6,286 Mil.
Total Assets was $13,989 Mil.
Property, Plant and Equipment(Net PPE) was $597 Mil.
Depreciation, Depletion and Amortization(DDA) was $501 Mil.
Selling, General & Admin. Expense(SGA) was $108 Mil.
Total Current Liabilities was $5,260 Mil.
Long-Term Debt was $4,130 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)
=(4708.941 / 17517.425) / (2376.5 / 17952.162)
=0.26881468 / 0.1323796
=2.0306

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)
=(621.448 / 17952.162) / (656.939 / 17517.425)
=0.03461689 / 0.03750203
=0.9231

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 - (6166.308 + 619.032) / 13641.041) / (1 - (6285.936 + 596.891) / 13989.215)
=0.50257902 / 0.50799048
=0.9893

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
=17517.425 / 17952.162
=0.9758

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))
=(501.02 / (501.02 + 596.891)) / (319.397 / (319.397 + 619.032))
=0.45633936 / 0.34035287
=1.3408

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)
=(119.477 / 17517.425) / (107.934 / 17952.162)
=0.00682047 / 0.00601231
=1.1344

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)
=((3851.082 + 5064.092) / 13641.041) / ((4130.087 + 5260.488) / 13989.215)
=0.65355525 / 0.67127248
=0.9736

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
=(224.223 - 6.493 - 654.369) / 13641.041
=-0.032

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.

AECOM has a M-score of -1.72 signals that the company is likely to 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 local exchange's currency.

AECOM Annual Data

Sep07Sep08Sep09Sep10Sep11Sep12Sep13Sep14Sep15Sep16
DSRI 1.22360.89831.17070.89320.98450.4592.3740.42450.9657
GMI 4.96180.96230.87311.1321.13120.93011.14391.62170.8058
AQI 1.09231.01681.09391.10020.90471.03270.98411.2831.0227
SGI 1.2261.1781.06971.22791.02250.99211.02492.15270.9678
DEPI 1.25910.81641.15040.91961.05830.92851.0230.54781.208
SGAI 0.05661.04511.18840.66570.87621.21240.81120.65441.0433
LVGI 1.23770.88651.17730.96851.03111.05240.99971.19460.9969
TATA 0.0017-0.01070.0130.024-0.0887-0.0305-0.0218-0.067-0.0529
M-score 0.18-2.47-2.30-2.09-2.84-3.21-1.19-1.91-2.86

AECOM Quarterly Data

Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16Dec16Mar17
DSRI 1.54151.23021.01980.42450.57920.36650.40970.96570.47362.0306
GMI 1.28441.52891.68771.62171.44651.03710.83360.80580.77860.9231
AQI 1.2911.24411.24651.2831.01610.98371.00091.02270.98130.9893
SGI 1.31191.66162.01042.15271.70321.35521.12530.96780.96650.9758
DEPI 1.19790.79220.64740.54780.43790.69190.91061.2081.33781.3408
SGAI 0.70330.58030.57980.65440.69550.84060.95941.04331.1381.1344
LVGI 1.14971.22451.24951.19461.04581.0281.01020.99690.9790.9736
TATA -0.0334-0.0426-0.0539-0.067-0.0455-0.0457-0.047-0.0529-0.0486-0.032
M-score -1.57-1.52-1.40-1.91-2.24-2.96-3.23-2.86-3.32-1.72
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