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AK Steel Holding Corp (NYSE:AKS)
Beneish M-Score
-3.34 (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 -3.34 suggests that the company is not a manipulator.

AKS' s Beneish M-Score Range Over the Past 10 Years
Min: -4.27   Max: -0.8
Current: -3.34

-4.27
-0.8

During the past 13 years, the highest Beneish M-Score of AK Steel Holding Corp was -0.80. The lowest was -4.27. And the median was -2.60.


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 * 1.0565+0.528 * 0.6487+0.404 * 0.7652+0.892 * 0.8403+0.115 * 1.0217
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.6589+4.679 * -0.0877-0.327 * 0.9165
=-3.34

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

This Year (Sep16) TTM:Last Year (Sep15) TTM:
Accounts Receivable was $489 Mil.
Revenue was 1452.9 + 1492.2 + 1518.8 + 1542.7 = $6,007 Mil.
Gross Profit was 258.8 + 167.2 + 153.3 + 222.9 = $802 Mil.
Total Current Assets was $1,701 Mil.
Total Assets was $3,921 Mil.
Property, Plant and Equipment(Net PPE) was $2,028 Mil.
Depreciation, Depletion and Amortization(DDA) was $230 Mil.
Selling, General & Admin. Expense(SGA) was $326 Mil.
Total Current Liabilities was $934 Mil.
Long-Term Debt was $2,000 Mil.
Net Income was 50.9 + 17.3 + -13.6 + -145.4 = $-91 Mil.
Non Operating Income was -7 + 2.1 + -0.7 + -29.3 = $-35 Mil.
Cash Flow from Operations was 14.9 + 136.3 + 136.7 + 0.2 = $288 Mil.
Accounts Receivable was $551 Mil.
Revenue was 1709.9 + 1689.4 + 1750.9 + 1997.6 = $7,148 Mil.
Gross Profit was 185.5 + 110.2 + 142.3 + 181.3 = $619 Mil.
Total Current Assets was $1,877 Mil.
Total Assets was $4,250 Mil.
Property, Plant and Equipment(Net PPE) was $2,101 Mil.
Depreciation, Depletion and Amortization(DDA) was $244 Mil.
Selling, General & Admin. Expense(SGA) was $234 Mil.
Total Current Liabilities was $1,085 Mil.
Long-Term Debt was $2,386 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)
=(489 / 6006.6) / (550.8 / 7147.8)
=0.08141045 / 0.07705868
=1.0565

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)
=(619.3 / 7147.8) / (802.2 / 6006.6)
=0.08664204 / 0.13355309
=0.6487

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 - (1701 + 2027.6) / 3920.8) / (1 - (1876.8 + 2101.2) / 4250.3)
=0.04902061 / 0.06406607
=0.7652

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
=6006.6 / 7147.8
=0.8403

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))
=(243.7 / (243.7 + 2101.2)) / (229.6 / (229.6 + 2027.6))
=0.10392767 / 0.10171894
=1.0217

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)
=(325.5 / 6006.6) / (233.5 / 7147.8)
=0.05419039 / 0.03266739
=1.6589

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)
=((2000.2 + 934.4) / 3920.8) / ((2386.3 + 1084.8) / 4250.3)
=0.7484697 / 0.81667176
=0.9165

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
=(-90.8 - -34.9 - 288.1) / 3920.8
=-0.0877

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 -3.34 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 local exchange's currency.

AK Steel Holding Corp Annual Data

Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15
DSRI 1.13750.83950.63771.84790.71211.07830.91561.18051.05040.6712
GMI 1.13450.6561.02611.87961.47340.81711.00250.80081.08490.7752
AQI 0.84570.89410.97331.18521.14681.25950.50821.09291.08430.345
SGI 1.07471.15391.09160.53331.4641.08370.91740.93881.16791.0288
DEPI 0.95470.94010.98610.95131.03821.12550.89890.93971.0970.8942
SGAI 0.92740.93260.91651.6160.72312.1870.74560.44030.98152.0477
LVGI 1.00860.84320.93341.0791.13321.12511.41861.1381.13331.1319
TATA -0.0139-0.0612-0.0172-0.03330.00270.0068-0.19540.0180.0512-0.1011
M-score -2.34-2.95-2.77-1.87-2.00-2.52-3.85-2.31-1.99-3.85

AK Steel Holding Corp Quarterly Data

Jun14Sep14Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16
DSRI 1.14591.22061.05040.93570.7730.65050.67120.90480.88721.0565
GMI 0.88640.92571.08490.81650.86090.88420.77520.82880.71940.6487
AQI 1.02741.05141.08430.61360.50630.50090.3450.62871.30790.7652
SGI 1.00871.08031.16791.23081.23141.19671.02880.940.89080.8403
DEPI 0.93751.14571.0971.06781.03960.83830.89420.9380.97881.0217
SGAI 0.2990.25280.98151.19081.73412.19481.94781.89641.66441.6589
LVGI 1.22111.13361.13331.13621.08361.11981.13191.05210.9390.9165
TATA 0.06510.0440.05120.0385-0.0389-0.08-0.1011-0.1334-0.1278-0.0877
M-score -2.04-1.92-1.99-2.48-3.09-3.53-3.83-3.66-3.40-3.34
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