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Arch Coal Inc (NYSE:ACI)
Beneish M-Score
-3.11 (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.

Arch Coal Inc has a M-score of -3.11 suggests that the company is not a manipulator.

ACI' s 10-Year Beneish M-Score Range
Min: -3.52   Max: 3.02
Current: -3.11

-3.52
3.02

During the past 13 years, the highest Beneish M-Score of Arch Coal Inc was 3.02. The lowest was -3.52. And the median was -2.76.


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 Arch Coal Inc 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 * 0.9026+0.528 * 0.6864+0.404 * 0.9321+0.892 * 0.9553+0.115 * 0.9956
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.8714+4.679 * -0.0661-0.327 * 1.0629
=-3.11

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.

This Year (Mar15) TTM:Last Year (Mar14) TTM:
Accounts Receivable was $198 Mil.
Revenue was 677.005 + 745.192 + 742.18 + 713.776 = $2,878 Mil.
Gross Profit was 114.683 + 134.546 + 95.084 + 91.639 = $436 Mil.
Total Current Assets was $1,531 Mil.
Total Assets was $8,315 Mil.
Property, Plant and Equipment(Net PPE) was $6,371 Mil.
Depreciation, Depletion and Amortization(DDA) was $419 Mil.
Selling, General & Admin. Expense(SGA) was $108 Mil.
Total Current Liabilities was $523 Mil.
Long-Term Debt was $5,118 Mil.
Net Income was -113.195 + -240.136 + -97.218 + -96.86 = $-547 Mil.
Non Operating Income was 0 + 0 + 0 + 0 = $0 Mil.
Cash Flow from Operations was -4.273 + -35.572 + 80.336 + -38.071 = $2 Mil.
Accounts Receivable was $230 Mil.
Revenue was 735.971 + 719.386 + 791.269 + 766.332 = $3,013 Mil.
Gross Profit was 49.657 + 50.903 + 102.557 + 110.134 = $313 Mil.
Total Current Assets was $1,737 Mil.
Total Assets was $8,823 Mil.
Property, Plant and Equipment(Net PPE) was $6,616 Mil.
Depreciation, Depletion and Amortization(DDA) was $433 Mil.
Selling, General & Admin. Expense(SGA) was $129 Mil.
Total Current Liabilities was $519 Mil.
Long-Term Debt was $5,113 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)
=(198.314 / 2878.153) / (230.002 / 3012.958)
=0.06890322 / 0.07633761
=0.9026

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)
=(134.546 / 3012.958) / (114.683 / 2878.153)
=0.10396793 / 0.15146936
=0.6864

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 - (1530.989 + 6371.335) / 8314.94) / (1 - (1737.328 + 6616.144) / 8823.184)
=0.04962345 / 0.05323611
=0.9321

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
=2878.153 / 3012.958
=0.9553

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))
=(433.259 / (433.259 + 6616.144)) / (419.199 / (419.199 + 6371.335))
=0.06146038 / 0.06173285
=0.9956

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)
=(107.692 / 2878.153) / (129.375 / 3012.958)
=0.03741705 / 0.04293953
=0.8714

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)
=((5117.982 + 523.351) / 8314.94) / ((5112.995 + 518.872) / 8823.184)
=0.67845745 / 0.63830325
=1.0629

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
=(-547.409 - 0 - 2.42) / 8314.94
=-0.0661

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.

Arch Coal Inc has a M-score of -3.11 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 own currency.

Arch Coal Inc Annual Data

Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14
DSRI 0.75311.18791.12280.75651.02730.88191.35990.739811.0962
GMI 1.05510.56491.08520.81191.36650.79081.04451.461.39630.9226
AQI 1.06671.10220.95410.84371.13681.05390.61780.71270.6980.9757
SGI 1.31540.99670.96531.23620.86341.23691.34510.87920.80.9744
DEPI 0.72731.22330.950.82281.21340.82971.82030.88781.07221.023
SGAI 1.39940.43841.16041.02611.05730.97710.7491.2831.24210.8784
LVGI 1.15140.96740.97030.96751.15770.96111.04111.10531.10191.0735
TATA -0.1092-0.0209-0.0427-0.0816-0.0704-0.1089-0.0488-0.0992-0.0728-0.0623
M-score -3.03-2.46-2.59-3.05-2.69-2.98-2.08-3.26-2.98-2.76

Arch Coal Inc Quarterly Data

Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14Dec14Mar15
DSRI 0.72451.12091.07110.91451.02111.02790.87011.21511.09620.9026
GMI 1.41071.43831.35941.41691.44511.48311.47291.36710.92260.6864
AQI 0.71270.71540.77030.76650.6980.69190.71130.70450.97570.9321
SGI 0.89770.79620.75480.75120.78350.84990.88480.92070.97440.9553
DEPI 0.88781.04911.16961.11581.07221.03851.06931.10591.0230.9956
SGAI 2.12232.4092.40772.02480.75090.66420.61880.64050.87840.8714
LVGI 1.10531.12961.01541.03941.10191.11241.11531.10951.07351.0629
TATA -0.0992-0.1061-0.0696-0.076-0.0728-0.0709-0.0697-0.0601-0.0623-0.0661
M-score -3.43-3.21-3.09-3.19-2.86-2.76-2.86-2.52-2.76-3.11
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