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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 -2.08 signals that the company is a manipulator.
During the past 13 years, the highest Beneish M-Score of AK Steel Holding Corp was 25.94. The lowest was -4.10. And the median was -2.39.
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 * 1.1459||+||0.528 * 0.8864||+||0.404 * 1.0274||+||0.892 * 1.0087||+||0.115 * 0.976|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.5683||+||4.679 * 0.0651||-||0.327 * 1.2211|
* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.
|This Year (Jun14) TTM:||Last Year (Jun13) TTM:|
|Accounts Receivable was $596 Mil.|
Revenue was 1530.8 + 1383.5 + 1464.8 + 1331.3 = $5,710 Mil.
Gross Profit was 113.9 + 47.9 + 140.9 + 108.9 = $412 Mil.
Total Current Assets was $1,506 Mil.
Total Assets was $3,807 Mil.
Property, Plant and Equipment(Net PPE) was $1,805 Mil.
Depreciation, Depletion and Amortization(DDA) was $210 Mil.
Selling, General & Admin. Expense(SGA) was $218 Mil.
Total Current Liabilities was $883 Mil.
Long-Term Debt was $1,948 Mil.
Net Income was -17.1 + -86.1 + 35.2 + -31.7 = $-100 Mil.
Non Operating Income was -3 + -1.9 + -2.9 + -2.8 = $-11 Mil.
Cash Flow from Operations was -206.1 + -125 + 113.5 + -119.2 = $-337 Mil.
|Accounts Receivable was $516 Mil.
Revenue was 1404.5 + 1369.8 + 1423.1 + 1463.5 = $5,661 Mil.
Gross Profit was 95.3 + 117.5 + 70.4 + 78.5 = $362 Mil.
Total Current Assets was $1,356 Mil.
Total Assets was $3,773 Mil.
Property, Plant and Equipment(Net PPE) was $1,939 Mil.
Depreciation, Depletion and Amortization(DDA) was $220 Mil.
Selling, General & Admin. Expense(SGA) was $380 Mil.
Total Current Liabilities was $883 Mil.
Long-Term Debt was $1,415 Mil.
1. DSRI = Days Sales in Receivables Index
A large increase in DSR could be indicative of revenue inflation.
|DSRI||=||(Receivables_t / Revenue_t)||/||(Receivables_t-1 / Revenue_t-1)|
|=||(596.2 / 5710.4)||/||(515.8 / 5660.9)|
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.
|=||(GrossProfit_t-1 / Revenue_t-1)||/||(GrossProfit_t / Revenue_t)|
|=||(47.9 / 5660.9)||/||(113.9 / 5710.4)|
3. AQI = Asset Quality Index
AQI is the ratio of asset quality in year t to year t-1.
|AQI||=||(1 - (CurrentAssets_t + PPE_t) / TotalAssets_t)||/||(1 - (CurrentAssets_t-1 + PPE_t-1) / TotalAssets_t-1)|
|=||(1 - (1506 + 1805.3) / 3806.6)||/||(1 - (1356.2 + 1938.7) / 3772.7)|
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.
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))|
|=||(219.5 / (219.5 + 1938.7))||/||(210 / (210 + 1805.3))|
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)|
|=||(217.6 / 5710.4)||/||(379.6 / 5660.9)|
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)|
|=||((1948.2 + 882.5) / 3806.6)||/||((1414.7 + 882.9) / 3772.7)|
8. TATA = Total Accruals to Total Assets
Total accruals calculated as the change in working capital accounts other than cash less depreciation.
|=||(NetIncome_t - NonOperatingIncome_t||-||CashFlowsfromOperations_t)||/||TotalAssets_t|
|=||(-99.7 - -10.6||-||-336.8)||/||3806.6|
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 -2.08 signals that the company is likely to be a manipulator.
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
AK Steel Holding Corp Annual Data
AK Steel Holding Corp Quarterly Data