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AK Steel Holding Corp (NYSE:AKS)
Beneish M-Score
-2.33 (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.

AK Steel Holding Corp has a M-score of -2.33 suggests that the company is not a manipulator.

AKS' s 10-Year Beneish M-Score Range
Min: -4.27   Max: -0.46
Current: -2.33

-4.27
-0.46

During the past 13 years, the highest Beneish M-Score of AK Steel Holding Corp was -0.46. The lowest was -4.27. And the median was -2.51.


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 AK Steel Holding Corp 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 * 1.0026+0.528 * 1.0112+0.404 * 1.089+0.892 * 0.9636+0.115 * 0.9381
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.6135+4.679 * 0.0305-0.327 * 1.1855
=-2.33

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

This Year (Mar14) TTM:Last Year (Mar13) TTM:
Accounts Receivable was $499 Mil.
Revenue was 1383.5 + 1464.8 + 1331.3 + 1404.5 = $5,584 Mil.
Gross Profit was 47.9 + 140.9 + 108.9 + 95.3 = $393 Mil.
Total Current Assets was $1,326 Mil.
Total Assets was $3,615 Mil.
Property, Plant and Equipment(Net PPE) was $1,844 Mil.
Depreciation, Depletion and Amortization(DDA) was $210 Mil.
Selling, General & Admin. Expense(SGA) was $214 Mil.
Total Current Liabilities was $867 Mil.
Long-Term Debt was $1,657 Mil.
Net Income was -86.1 + 35.2 + -31.7 + -40.4 = $-123 Mil.
Non Operating Income was -1.9 + -2.9 + -2.8 + 2.5 = $-5 Mil.
Cash Flow from Operations was -125 + 113.5 + -119.2 + -97.5 = $-228 Mil.
Accounts Receivable was $516 Mil.
Revenue was 1369.8 + 1423.1 + 1463.5 + 1538.4 = $5,795 Mil.
Gross Profit was 117.5 + 70.4 + 78.5 + 146 = $412 Mil.
Total Current Assets was $1,493 Mil.
Total Assets was $3,906 Mil.
Property, Plant and Equipment(Net PPE) was $1,972 Mil.
Depreciation, Depletion and Amortization(DDA) was $209 Mil.
Selling, General & Admin. Expense(SGA) was $362 Mil.
Total Current Liabilities was $889 Mil.
Long-Term Debt was $1,412 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)
=(498.9 / 5584.1) / (516.4 / 5794.8)
=0.08934296 / 0.08911438
=1.0026

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)
=(140.9 / 5794.8) / (47.9 / 5584.1)
=0.07116725 / 0.0703784
=1.0112

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 - (1326.3 + 1844.4) / 3615.4) / (1 - (1492.6 + 1972.3) / 3906.1)
=0.1230016 / 0.11295154
=1.089

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
=5584.1 / 5794.8
=0.9636

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))
=(208.9 / (208.9 + 1972.3)) / (209.7 / (209.7 + 1844.4))
=0.09577297 / 0.10208851
=0.9381

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)
=(213.9 / 5584.1) / (361.8 / 5794.8)
=0.03830519 / 0.06243529
=0.6135

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)
=((1657.2 + 867.1) / 3615.4) / ((1411.9 + 888.6) / 3906.1)
=0.69820767 / 0.58895062
=1.1855

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
=(-123 - -5.1 - -228.2) / 3615.4
=0.0305

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.

AK Steel Holding Corp has a M-score of -2.33 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.

AK Steel Holding Corp Annual Data

Dec04Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13
DSRI 1.22730.83241.13750.83950.63771.84790.71211.07830.91561.1805
GMI 0.30111.10421.13450.6561.02611.87961.47340.81711.00250.8008
AQI 0.76310.95720.84570.89410.97331.18521.14681.25950.50821.0929
SGI 1.29091.08241.07471.15391.09160.53331.4641.08370.91740.9388
DEPI 1.01351.03520.95470.94010.98610.95131.03821.12550.89890.9397
SGAI 0.65640.93280.92740.93260.91651.6160.72312.1870.82510.5975
LVGI 0.86561.08021.00860.84320.93341.0791.13321.12511.41861.138
TATA 0.0657-0.02940.0131-0.0536-0.0172-0.03330.00270.0068-0.19540.018
M-score -2.06-2.67-2.21-2.91-2.77-1.87-2.00-2.52-3.86-2.33

AK Steel Holding Corp Quarterly Data

Dec11Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14
DSRI 1.07830.96590.87191.01040.91560.88341.02111.0331.18051.0026
GMI 0.81710.68340.63230.91561.00250.92031.03580.89430.80081.0112
AQI 1.25951.29310.69080.71870.50820.51331.1051.0111.09291.089
SGI 1.08371.0410.96890.94810.91740.90610.92170.91840.93880.9636
DEPI 1.12551.01920.95140.99480.89890.93930.95760.9230.93970.9381
SGAI 2.26752.36812.53182.70270.79580.7940.78240.77470.59750.6135
LVGI 1.12511.13181.33041.36621.41861.31361.07781.09361.1381.1855
TATA 0.0068-0.0075-0.2027-0.1978-0.1954-0.2316-0.0771-0.05620.0180.0305
M-score -2.54-2.83-4.27-4.01-3.86-4.07-2.82-2.84-2.33-2.33
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