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AK Steel Holding Corp (NYSE:AKS)
Beneish M-Score
-3.42 (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 -3.42 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: -3.42

-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 -2.59.


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 * 0.8872+0.528 * 0.7194+0.404 * 1.3079+0.892 * 0.8908+0.115 * 0.9788
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.7649+4.679 * -0.1278-0.327 * 0.939
=-3.42

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

This Year (Jun16) TTM:Last Year (Jun15) TTM:
Accounts Receivable was $449 Mil.
Revenue was 1492.2 + 1518.8 + 1542.7 + 1709.9 = $6,264 Mil.
Gross Profit was 167.2 + 153.3 + 222.9 + 185.5 = $729 Mil.
Total Current Assets was $1,552 Mil.
Total Assets was $3,918 Mil.
Property, Plant and Equipment(Net PPE) was $2,029 Mil.
Depreciation, Depletion and Amortization(DDA) was $232 Mil.
Selling, General & Admin. Expense(SGA) was $355 Mil.
Total Current Liabilities was $887 Mil.
Long-Term Debt was $2,078 Mil.
Net Income was 17.3 + -13.6 + -145.4 + 6.7 = $-135 Mil.
Non Operating Income was 2.1 + -0.7 + -29.3 + 4.3 = $-24 Mil.
Cash Flow from Operations was 136.3 + 136.7 + 0.2 + 116.2 = $389 Mil.
Accounts Receivable was $568 Mil.
Revenue was 1689.4 + 1750.9 + 1997.6 + 1593.8 = $7,032 Mil.
Gross Profit was 110.2 + 142.3 + 181.3 + 154.9 = $589 Mil.
Total Current Assets was $1,914 Mil.
Total Assets was $4,335 Mil.
Property, Plant and Equipment(Net PPE) was $2,136 Mil.
Depreciation, Depletion and Amortization(DDA) was $238 Mil.
Selling, General & Admin. Expense(SGA) was $226 Mil.
Total Current Liabilities was $1,051 Mil.
Long-Term Debt was $2,443 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)
=(448.5 / 6263.6) / (567.5 / 7031.7)
=0.07160419 / 0.08070595
=0.8872

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)
=(588.7 / 7031.7) / (728.9 / 6263.6)
=0.08372086 / 0.11637078
=0.7194

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 - (1551.6 + 2029.1) / 3918.3) / (1 - (1914.3 + 2135.5) / 4335.4)
=0.08615981 / 0.06587627
=1.3079

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
=6263.6 / 7031.7
=0.8908

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))
=(237.9 / (237.9 + 2135.5)) / (231.5 / (231.5 + 2029.1))
=0.10023595 / 0.10240644
=0.9788

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)
=(355.3 / 6263.6) / (226 / 7031.7)
=0.05672457 / 0.03214017
=1.7649

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)
=((2078.1 + 886.6) / 3918.3) / ((2442.5 + 1050.9) / 4335.4)
=0.75662915 / 0.80578493
=0.939

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
=(-135 - -23.6 - 389.4) / 3918.3
=-0.1278

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 -3.42 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

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

Mar14Jun14Sep14Dec14Mar15Jun15Sep15Dec15Mar16Jun16
DSRI 1.00261.14591.22061.05040.93570.7730.65050.67120.90480.8872
GMI 1.01120.88640.92571.08490.81650.86090.88420.77520.82880.7194
AQI 1.0891.02741.05141.08430.61360.50630.50090.3450.62871.3079
SGI 0.96361.00871.08031.16791.23081.23141.19671.02880.940.8908
DEPI 0.93810.93751.14571.0971.06781.03960.83830.89420.9380.9788
SGAI 0.38010.2990.25280.98151.19081.86712.19672.24742.18951.7649
LVGI 1.18551.22111.13361.13331.13621.08361.11981.13191.05210.939
TATA 0.03050.06510.0440.05120.0385-0.0389-0.08-0.1011-0.1334-0.1278
M-score -2.29-2.04-1.92-1.99-2.48-3.11-3.53-3.88-3.71-3.42
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