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Arch Coal Inc (NYSE:ACI)
Beneish M-Score
-3.00 (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 -3.00 suggests that the company is not a manipulator.

ACI' s 10-Year Beneish M-Score Range
Min: -3.52   Max: 3.02
Current: -3

-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 * 1.0582+0.528 * 0.6619+0.404 * 0.9114+0.892 * 0.9488+0.115 * 0.9688
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.8602+4.679 * -0.0664-0.327 * 1.0709
=-3.00

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

This Year (Jun15) TTM:Last Year (Jun14) TTM:
Accounts Receivable was $205 Mil.
Revenue was 644.462 + 677.005 + 745.192 + 742.18 = $2,809 Mil.
Gross Profit was 78.21 + 114.683 + 134.546 + 95.084 = $423 Mil.
Total Current Assets was $1,297 Mil.
Total Assets was $8,036 Mil.
Property, Plant and Equipment(Net PPE) was $6,341 Mil.
Depreciation, Depletion and Amortization(DDA) was $414 Mil.
Selling, General & Admin. Expense(SGA) was $102 Mil.
Total Current Liabilities was $451 Mil.
Long-Term Debt was $5,115 Mil.
Net Income was -168.103 + -113.195 + -240.136 + -97.218 = $-619 Mil.
Non Operating Income was -4.016 + 0 + 0 + 0 = $-4 Mil.
Cash Flow from Operations was -121.302 + -4.273 + -35.572 + 80.336 = $-81 Mil.
Accounts Receivable was $204 Mil.
Revenue was 713.776 + 735.971 + 719.386 + 791.269 = $2,960 Mil.
Gross Profit was 91.639 + 49.657 + 50.903 + 102.557 = $295 Mil.
Total Current Assets was $1,582 Mil.
Total Assets was $8,656 Mil.
Property, Plant and Equipment(Net PPE) was $6,603 Mil.
Depreciation, Depletion and Amortization(DDA) was $417 Mil.
Selling, General & Admin. Expense(SGA) was $125 Mil.
Total Current Liabilities was $482 Mil.
Long-Term Debt was $5,116 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)
=(204.593 / 2808.839) / (203.782 / 2960.402)
=0.07283899 / 0.06883592
=1.0582

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)
=(114.683 / 2960.402) / (78.21 / 2808.839)
=0.09956621 / 0.15042621
=0.6619

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 - (1296.921 + 6341.026) / 8036.355) / (1 - (1581.788 + 6603.458) / 8656.108)
=0.04957571 / 0.0543965
=0.9114

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
=2808.839 / 2960.402
=0.9488

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))
=(416.923 / (416.923 + 6603.458)) / (414.107 / (414.107 + 6341.026))
=0.05938752 / 0.06130257
=0.9688

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)
=(102.029 / 2808.839) / (125.004 / 2960.402)
=0.03632426 / 0.04222535
=0.8602

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)
=((5114.581 + 451.446) / 8036.355) / ((5116.353 + 481.792) / 8656.108)
=0.69260591 / 0.64672772
=1.0709

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
=(-618.652 - -4.016 - -80.811) / 8036.355
=-0.0664

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 -3.00 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

Mar13Jun13Sep13Dec13Mar14Jun14Sep14Dec14Mar15Jun15
DSRI 1.12091.07110.91451.02111.02790.87011.21511.09620.90261.0582
GMI 1.43831.35941.41691.44511.48311.47291.36710.92260.68640.6619
AQI 0.71540.77030.76650.6980.69190.71130.70450.97570.93210.9114
SGI 0.79620.75480.75120.78350.84990.88480.92070.97440.95530.9488
DEPI 1.04911.16961.11581.07221.03851.06931.10591.0230.99560.9688
SGAI 2.4092.40772.02480.75090.66420.61880.64050.87840.87140.8602
LVGI 1.12961.01541.03941.10191.11241.11531.10951.07351.06291.0709
TATA -0.1061-0.0696-0.076-0.0728-0.0709-0.0697-0.0601-0.0623-0.0661-0.0664
M-score -3.21-3.09-3.19-2.86-2.76-2.86-2.52-2.76-3.11-3.00
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