LATAM Airlines Group (LATAM Airlines Group) Beneish M-Score : -2.82 (As of May. 16, 2024)

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What is LATAM Airlines Group Beneish M-Score?

The zones of discrimination for M-Score is as such:

An M-Score of equal or less than -1.78 suggests that the company is unlikely to be a manipulator.
An M-Score of greater than -1.78 signals that the company is likely to be a manipulator.

Good Sign:

Beneish M-Score -2.82 no higher than -1.78, which implies that the company is unlikely to be a manipulator.

The historical rank and industry rank for LATAM Airlines Group's Beneish M-Score or its related term are showing as below:

LTMAY' s Beneish M-Score Range Over the Past 10 Years
Min: -12.93 Med: -2.94 Max: -1.37
Current: -2.82

During the past 13 years, the highest Beneish M-Score of LATAM Airlines Group was -1.37. The lowest was -12.93. And the median was -2.94.

LATAM Airlines Group Beneish M-Score Historical Data

The historical data trend for LATAM Airlines Group's Beneish M-Score can be seen below:

* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD.
* For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.

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LATAM Airlines Group Beneish M-Score Chart

LATAM Airlines Group Annual Data

Trend

Dec14

Dec15

Dec16

Dec17

Dec18

Dec19

Dec20

Dec21

Dec22

Dec23

Beneish M-Score

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-2.91

-2.90

-12.93

-2.40

-2.93

LATAM Airlines Group Quarterly Data
	Jun19	Sep19	Dec19	Mar20	Jun20	Sep20	Dec20	Mar21	Jun21	Sep21	Dec21	Mar22	Jun22	Sep22	Dec22	Mar23	Jun23	Sep23	Dec23	Mar24
Beneish M-Score	Get a 7-Day Free Trial															-2.46	-2.49	-2.44	-2.93	-2.82

Competitive Comparison of LATAM Airlines Group's Beneish M-Score

For the Airlines subindustry, LATAM Airlines Group's Beneish M-Score, along with its competitors' market caps and Beneish M-Score data, can be viewed below:

* Competitive companies are chosen from companies within the same industry, with headquarter located in same country, with closest market capitalization; x-axis shows the market cap, and y-axis shows the term value; the bigger the dot, the larger the market cap. Note that "N/A" values will not show up in the chart.

LATAM Airlines Group's Beneish M-Score Distribution in the Transportation Industry

For the Transportation industry and Industrials sector, LATAM Airlines Group's Beneish M-Score distribution charts can be found below:

* The bar in red indicates where LATAM Airlines Group's Beneish M-Score falls into.

LATAM Airlines Group Beneish M-Score Calculation

The M-score was created by Professor Messod Beneish. Instead of measuring the bankruptcy risk (Altman Z-Score) or business trend (Piotroski 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 LATAM Airlines Group for today is based on a combination of the following eight different indices:

-4.84

0.92 * DSRI

0.528 * GMI

0.404 * AQI

0.892 * SGI

0.115 * DEPI

-4.84

0.92 * 1.0549

0.528 * 0.6216

0.404 * 0.9345

0.892 * 1.1863

0.115 * 1

0.172 * SGAI

4.679 * TATA

0.327 * LVGI

0.172 * 0.5978

4.679 * -0.109096

0.327 * 0.9861

-2.93

This Year (Mar24) TTM:

Last Year (Mar23) TTM:

Total Receivables was $1,594 Mil.
Revenue was 3267.199 + 3102.554 + 3024.521 + 2676.063 = $12,070 Mil.
Gross Profit was 873.34 + 900.16 + 825.052 + 591.283 = $3,190 Mil.
Total Current Assets was $4,336 Mil.
Total Assets was $14,903 Mil.
Property, Plant and Equipment(Net PPE) was $9,226 Mil.
Depreciation, Depletion and Amortization(DDA) was $0 Mil.
Selling, General, & Admin. Expense(SGA) was $991 Mil.
Total Current Liabilities was $5,686 Mil.
Long-Term Debt & Capital Lease Obligation was $6,400 Mil.
Net Income was 258.279 + -27.15 + 231.82 + 187.973 = $651 Mil.
Non Operating Income was -5.729 + -39.839 + -3.073 + 45.685 = $-3 Mil.
Cash Flow from Operations was 458.125 + 705.305 + 588.393 + 527.935 = $2,280 Mil.

Total Receivables was $1,274 Mil.
Revenue was 2771.642 + 2589.985 + 2587.419 + 2226.087 = $10,175 Mil.
Gross Profit was 602.573 + 498.308 + 345.664 + 225.008 = $1,672 Mil.
Total Current Assets was $3,790 Mil.
Total Assets was $13,439 Mil.
Property, Plant and Equipment(Net PPE) was $8,354 Mil.
Depreciation, Depletion and Amortization(DDA) was $0 Mil.
Selling, General, & Admin. Expense(SGA) was $1,397 Mil.
Total Current Liabilities was $5,191 Mil.
Long-Term Debt & Capital Lease Obligation was $5,861 Mil.

1. DSRI = Days Sales in Receivables Index

Measured as the ratio of Revenue in Total 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)
	=	(1593.832 / 12070.337)	/	(1273.703 / 10175.133)
	=	0.132045	/	0.125178
	=	1.0549

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)
	=	(1671.553 / 10175.133)	/	(3189.835 / 12070.337)
	=	0.164278	/	0.264271
	=	0.6216

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 Property, Plant and Equipment to Total Assets.

AQI	=	(1 - (CurrentAssets_t + PPE_t) / TotalAssets_t)	/	(1 - (CurrentAssets_t-1 + PPE_t-1) / TotalAssets_t-1)
	=	(1 - (4336.111 + 9225.657) / 14903.214)	/	(1 - (3790.215 + 8354.278) / 13439.012)
	=	0.090011	/	0.096325
	=	0.9345

4. SGI = Sales Growth Index

Ratio of Revenue 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
	=	12070.337	/	10175.133
	=	1.1863

5. DEPI = Depreciation Index

Measured as the ratio of the rate of Depreciation, Depletion and Amortization 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))
	=	(0 / (0 + 8354.278))	/	(0 / (0 + 9225.657))
	=	0	/	0
	=	1

Note: If the Depreciation, Depletion and Amortization data is not available, we assume that the depreciation rate is constant and set the Depreciation Index to 1.

6. SGAI = Sales, General and Administrative expenses Index

The ratio of Selling, General, & Admin. Expense(SGA) to Sales 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)
	=	(990.569 / 12070.337)	/	(1396.781 / 10175.133)
	=	0.082066	/	0.137274
	=	0.5978

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 in leverage

LVGI	=	((LTD_t + CurrentLiabilities_t) / TotalAssets_t)	/	((LTD_t-1 + CurrentLiabilities_t-1) / TotalAssets_t-1)
	=	((6400.346 + 5685.574) / 14903.214)	/	((5861.063 + 5191.088) / 13439.012)
	=	0.810961	/	0.822393
	=	0.9861

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
	=	(650.922 - -2.956	-	2279.758)	/	14903.214
	=	-0.109096

An M-Score of equal or less than -1.78 suggests that the company is unlikely to be a manipulator. An M-Score of greater than -1.78 signals that the company is likely to be a manipulator.

LATAM Airlines Group has a M-score of -2.93 suggests that the company is unlikely to be a manipulator.

LATAM Airlines Group Beneish M-Score Related Terms

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LATAM Airlines Group (LATAM Airlines Group) Business Description

Industry

GURUFOCUS.COM » STOCK LIST » Industrials » Transportation » LATAM Airlines Group SA (OTCPK:LTMAY) » Definitions » Beneish M-Score

Comparable Companies

Traded in Other Exchanges

LFL:Germany LTM:Chile

Address

Avenida Presidente Riesco No. 5711, 20th Floor, Las Condes, Santiago, CHL

Website

https://www.latamairlinesgroup.net

LATAM Airlines Group SA operates as a passenger airline group. Geographically, the company operates in Brazil, Chile, Colombia, Ecuador, and Peru, along with international operations within Latin America and to Europe, the US, and the Caribbean. The firm generates its revenue from transporting passengers and cargo.