Asset Quality Index Last Year

The Asset Quality Index can be used to judge whether companies are excessively capitalising expenses. The index is the ratio of non-current assets other than plant, property, and equipment to total assets this year relative to last year.

Stockopedia explains AQI

The Asset Quality Index can be used to gague whether a firm is improperly capitalising expenses. If the index value is greater than 1, then this could indicate excessive capitalization.

Back in the 1960s, Professor Messod Beneish counducted a study which found that the average Asset Quality Index for companies that were not manipulating earnings was 1.039, as compared with 1.254 for manipulators.

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