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GuruFocus has detected 6 Warning Signs with Forward Air Corp $FWRD.
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Forward Air Corp (NAS:FWRD)
Beneish M-Score
-3.01 (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.

Forward Air Corp has a M-score of -3.01 suggests that the company is not a manipulator.

FWRD' s Beneish M-Score Range Over the Past 10 Years
Min: -3.56   Max: 47.04
Current: -3.01

-3.56
47.04

During the past 13 years, the highest Beneish M-Score of Forward Air Corp was 47.04. The lowest was -3.56. And the median was -2.58.


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 Forward Air 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 * 1.0973+0.528 * 0.9994+0.404 * 0.9695+0.892 * 1.0175+0.115 * 1.0407
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9707+4.679 * -0.1591-0.327 * 0.6529
=-3.01

* 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 $116.5 Mil.
Revenue was 246.982 + 264.793 + 249.552 + 238.637 = $1,000.0 Mil.
Gross Profit was 118.812 + 126.376 + 117.712 + 136.371 = $499.3 Mil.
Total Current Assets was $139.2 Mil.
Total Assets was $635.9 Mil.
Property, Plant and Equipment(Net PPE) was $193.9 Mil.
Depreciation, Depletion and Amortization(DDA) was $38.6 Mil.
Selling, General & Admin. Expense(SGA) was $266.6 Mil.
Total Current Liabilities was $58.5 Mil.
Long-Term Debt was $13.5 Mil.
Net Income was 14.243 + 12.706 + 11.931 + -10.066 = $28.8 Mil.
Non Operating Income was -0.026 + 0.153 + -0.004 + -0.117 = $0.0 Mil.
Cash Flow from Operations was 37.06 + 35.742 + 33.402 + 23.765 = $130.0 Mil.
Accounts Receivable was $104.3 Mil.
Revenue was 229.549 + 256.42 + 247.093 + 249.694 = $982.8 Mil.
Gross Profit was 110.849 + 124.916 + 116.6 + 138.024 = $490.4 Mil.
Total Current Assets was $167.9 Mil.
Total Assets was $689.1 Mil.
Property, Plant and Equipment(Net PPE) was $182.8 Mil.
Depreciation, Depletion and Amortization(DDA) was $38.1 Mil.
Selling, General & Admin. Expense(SGA) was $269.9 Mil.
Total Current Liabilities was $118.7 Mil.
Long-Term Debt was $0.8 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)
=(116.473 / 999.964) / (104.317 / 982.756)
=0.11647719 / 0.10614741
=1.0973

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)
=(490.389 / 982.756) / (499.271 / 999.964)
=0.49899365 / 0.49928897
=0.9994

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 - (139.202 + 193.937) / 635.868) / (1 - (167.936 + 182.759) / 689.053)
=0.4760878 / 0.49104786
=0.9695

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
=999.964 / 982.756
=1.0175

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))
=(38.141 / (38.141 + 182.759)) / (38.575 / (38.575 + 193.937))
=0.17266184 / 0.16590542
=1.0407

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)
=(266.571 / 999.964) / (269.895 / 982.756)
=0.2665806 / 0.27463073
=0.9707

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)
=((13.529 + 58.485) / 635.868) / ((0.779 + 118.748) / 689.053)
=0.11325307 / 0.17346561
=0.6529

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
=(28.814 - 0.006 - 129.969) / 635.868
=-0.1591

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.

Forward Air Corp has a M-score of -3.01 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 local exchange's currency.

Forward Air Corp Annual Data

Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15Dec16
DSRI 0.79281.10710.97151.01950.9740.91051.04110.93251.0427
GMI 0.98791.35690.84031.00151.02751.02131.11790.98130.9825
AQI 1.08480.84370.85890.95770.80291.5381.57021.19140.9808
SGI 1.2080.87981.15941.10841.08961.11641.19691.22811.0244
DEPI 0.79870.89590.95421.00051.02331.02860.86470.92361.033
SGAI 1.0861.15911.18910.91750.96040.99190.78821.18540.9693
LVGI 1.06841.00470.86970.44630.69780.97551.21242.37260.6236
TATA -0.055-0.1277-0.0632-0.0875-0.0399-0.072-0.0571-0.043-0.1601
M-score -2.77-3.00-2.80-2.60-2.57-2.55-2.29-2.96-3.05

Forward Air Corp Quarterly Data

Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16Dec16Mar17
DSRI 1.04111.07681.03160.93550.93250.71840.80050.94641.04271.0973
GMI 1.11791.17021.15641.20710.98130.92170.92920.89620.98250.9994
AQI 1.57021.18531.19171.20231.19141.01490.93930.96070.98080.9695
SGI 1.19691.19461.21581.22571.22811.20541.11541.06261.02441.0175
DEPI 0.86470.80870.7910.8220.92360.92530.99151.06611.0331.0407
SGAI 0.78820.74990.82270.78911.18541.22951.10251.15620.96930.9707
LVGI 1.21243.03762.8912.5492.37260.67110.64440.64250.62360.6529
TATA -0.0571-0.0328-0.0289-0.0494-0.043-0.0752-0.134-0.1321-0.1601-0.1591
M-score -2.29-2.87-2.85-2.87-2.96-2.88-3.15-3.06-3.05-3.01
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