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AAR Beneish M-Score

: -2.31 (As of Today)
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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 -2.31 no higher than -1.78, which implies that the company is unlikely to be a manipulator.

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

AIR' s Beneish M-Score Range Over the Past 10 Years
Min: -3.33   Med: -2.38   Max: 0.49
Current: -2.31

During the past 13 years, the highest Beneish M-Score of AAR was 0.49. The lowest was -3.33. And the median was -2.38.


AAR Beneish M-Score Historical Data

The historical data trend for AAR'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.

* Premium members only.

AAR Annual Data
Trend May13 May14 May15 May16 May17 May18 May19 May20 May21 May22
Beneish M-Score
Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only -2.84 -2.40 -2.62 -2.38 -2.31

AAR Quarterly Data
Aug17 Nov17 Feb18 May18 Aug18 Nov18 Feb19 May19 Aug19 Nov19 Feb20 May20 Aug20 Nov20 Feb21 May21 Aug21 Nov21 Feb22 May22
Beneish M-Score Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only -2.38 -2.34 -2.34 -2.33 -2.31

Competitive Comparison

For the Aerospace & Defense subindustry, AAR'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.

   

AAR Beneish M-Score Distribution

For the Aerospace & Defense industry and Industrials sector, AAR's Beneish M-Score distribution charts can be found below:

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



AAR 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 AAR 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 * 1.0943+0.528 * 0.9703+0.404 * 0.9235+0.892 * 1.1015+0.115 * 1.0192
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0064+4.679 * 0.0035-0.327 * 0.9305
=-2.31

* 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.

This Year (May22) TTM:Last Year (May21) TTM:
Total Receivables was $288 Mil.
Revenue was 476.1 + 452.2 + 436.6 + 455.1 = $1,820 Mil.
Gross Profit was 89.8 + 80.4 + 78.4 + 64.6 = $313 Mil.
Total Current Assets was $1,007 Mil.
Total Assets was $1,574 Mil.
Property, Plant and Equipment(Net PPE) was $183 Mil.
Depreciation, Depletion and Amortization(DDA) was $33 Mil.
Selling, General, & Admin. Expense(SGA) was $202 Mil.
Total Current Liabilities was $348 Mil.
Long-Term Debt & Capital Lease Obligation was $156 Mil.
Net Income was 23.9 + 22.5 + 20.8 + 11.5 = $79 Mil.
Non Operating Income was -1.5 + 0 + -1.4 + 0.9 = $-2 Mil.
Cash Flow from Operations was 40.1 + 15.9 + 16.3 + 2.9 = $75 Mil.
Total Receivables was $239 Mil.
Revenue was 437.6 + 410.3 + 403.6 + 400.8 = $1,652 Mil.
Gross Profit was 71.8 + 86 + 69.5 + 48.6 = $276 Mil.
Total Current Assets was $937 Mil.
Total Assets was $1,540 Mil.
Property, Plant and Equipment(Net PPE) was $196 Mil.
Depreciation, Depletion and Amortization(DDA) was $36 Mil.
Selling, General, & Admin. Expense(SGA) was $182 Mil.
Total Current Liabilities was $337 Mil.
Long-Term Debt & Capital Lease Obligation was $194 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)
=(287.6 / 1820) / (238.6 / 1652.3)
=0.15802198 / 0.14440477
=1.0943

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)
=(275.9 / 1652.3) / (313.2 / 1820)
=0.16697936 / 0.17208791
=0.9703

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 - (1007.2 + 182.6) / 1573.9) / (1 - (937 + 195.8) / 1539.7)
=0.24404346 / 0.26427226
=0.9235

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
=1820 / 1652.3
=1.1015

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))
=(36.3 / (36.3 + 195.8)) / (33.1 / (33.1 + 182.6))
=0.1563981 / 0.15345387
=1.0192

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)
=(202.2 / 1820) / (182.4 / 1652.3)
=0.1110989 / 0.11039158
=1.0064

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)
=((156.3 + 348.2) / 1573.9) / ((193.6 + 336.8) / 1539.7)
=0.32054133 / 0.34448269
=0.9305

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
=(78.7 - -2 - 75.2) / 1573.9
=0.0035

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.

AAR has a M-score of -2.31 suggests that the company is unlikely to be a manipulator.


AAR Business Description

AAR logo
Traded in Other Exchanges
Address
1100 North Wood Dale Road, One AAR Place, Wood Dale, IL, USA, 60191
AAR Corp is engaged in providing products and services to aviation, government, and defense market. It operates in two segments namely Aviation Services and Expeditionary Services. The Aviation Services segment consists of aftermarket support and services businesses that provide spares and maintenance support for aircraft operated by it's commercial and government/defense customers. The Expeditionary Services segment consists of businesses that provide products and services supporting the movement of equipment and personnel by the U.S. Department of Defense, foreign governments, and non-governmental organizations. It generates a majority of its revenue from the Aviation Services Segment.
Executives
Lord Ellen M. director 1100 N. WOOD DALE ROAD WOOD DALE IL 60191
Leduc Robert F director UNITED TECHNOLOGIES CORP 10 FARM SPRINGS ROAD FARMINGTON CT 06032
Gilbertson H John Jr director 3005 HIGHLAND PARKWAY SUITE 200 DOWNERS GROVE IL 60515
Mcnabb Duncan J. director C/O ATLAS AIR WORLDWIDE HOLDINGS, INC. 2000 WESTCHESTER AVENUE PURCHASE NY 10577
Garascia Jessica A. officer: Vice President and Secretary 1100 N. WOOD DALE ROAD WOOD DALE IL 60191
Jessup Christopher A. officer: Vice President-CCO 1100 N. WOOD DALE ROAD WOOD DALE IL 60191
Gillen Sean M. officer: VP-CFO 1100 N. WOOD DALE ROAD WOOD DALE IL 60191
Milligan Michael D officer: Chief Financial Officer 1100 N. WOOD DALE ROAD WOOD DALE IL 60191
Pachapa Eric officer: VP, Controller and CAO 1100 N. WOOD DALE ROAD WOOD DALE IL 60191
Vogel Jennifer L director C/O AAR CORP. 1100 N. WOOD DALE ROAD WOOD DALE IL 60191
Fortson John C. officer: VP, CFO & Treasurer 5255 VIRGINIA AVE NORTH CHARLESTON SC 29406
Anderson Anthony director 1100 N. WOOD DALE ROAD WOOD DALE IL 60191
Holmes John Mcclain Iii officer: Group Vice President 1100 N. WOOD DALE ROAD WOOD DALE IL 60191
Pace Peter director C/O AAR CORP. 1100 N. WOOD DALE ROAD WOOD DALE IL 60191
Martinez Randy J officer: Group Vice President HLH BUILDING 101 WORLD DRIVE PEACHTREE CITY GA 30269

AAR Headlines

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