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AK Steel Holding Corp (NYSE:AKS)
Beneish M-Score
-1.98 (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 -1.98 signals that the company is a manipulator.

AKS' s 10-Year Beneish M-Score Range
Min: -4.27   Max: -0.89
Current: -1.98

-4.27
-0.89

During the past 13 years, the highest Beneish M-Score of AK Steel Holding Corp was -0.89. The lowest was -4.27. And the median was -2.50.


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 * 1.2206+0.528 * 0.9257+0.404 * 1.0514+0.892 * 1.0803+0.115 * 1.1457
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.5944+4.679 * 0.044-0.327 * 1.1336
=-1.98

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

This Year (Sep14) TTM:Last Year (Sep13) TTM:
Accounts Receivable was $708 Mil.
Revenue was 1593.8 + 1530.8 + 1383.5 + 1464.8 = $5,973 Mil.
Gross Profit was 154.9 + 113.9 + 47.9 + 140.9 = $458 Mil.
Total Current Assets was $2,045 Mil.
Total Assets was $4,885 Mil.
Property, Plant and Equipment(Net PPE) was $2,215 Mil.
Depreciation, Depletion and Amortization(DDA) was $211 Mil.
Selling, General & Admin. Expense(SGA) was $232 Mil.
Total Current Liabilities was $1,156 Mil.
Long-Term Debt was $2,406 Mil.
Net Income was -7.2 + -17.1 + -86.1 + 35.2 = $-75 Mil.
Non Operating Income was -15.3 + -3 + -1.9 + -2.9 = $-23 Mil.
Cash Flow from Operations was -49.5 + -206.1 + -125 + 113.5 = $-267 Mil.
Accounts Receivable was $537 Mil.
Revenue was 1331.3 + 1404.5 + 1369.8 + 1423.1 = $5,529 Mil.
Gross Profit was 108.9 + 95.3 + 117.5 + 70.4 = $392 Mil.
Total Current Assets was $1,403 Mil.
Total Assets was $3,766 Mil.
Property, Plant and Equipment(Net PPE) was $1,906 Mil.
Depreciation, Depletion and Amortization(DDA) was $211 Mil.
Selling, General & Admin. Expense(SGA) was $361 Mil.
Total Current Liabilities was $1,008 Mil.
Long-Term Debt was $1,415 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)
=(707.6 / 5972.9) / (536.6 / 5528.7)
=0.11846842 / 0.09705717
=1.2206

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)
=(113.9 / 5528.7) / (154.9 / 5972.9)
=0.07092083 / 0.0766127
=0.9257

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 - (2045.4 + 2215.1) / 4885.4) / (1 - (1402.5 + 1905.7) / 3766.4)
=0.12791174 / 0.12165463
=1.0514

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
=5972.9 / 5528.7
=1.0803

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))
=(211.3 / (211.3 + 1905.7)) / (211.4 / (211.4 + 2215.1))
=0.09981105 / 0.08712137
=1.1457

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)
=(231.7 / 5972.9) / (360.8 / 5528.7)
=0.03879188 / 0.06525946
=0.5944

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)
=((2406.4 + 1156.4) / 4885.4) / ((1415.4 + 1007.6) / 3766.4)
=0.72927498 / 0.64331988
=1.1336

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
=(-75.2 - -23.1 - -267.1) / 4885.4
=0.044

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 -1.98 signals that the company is likely to 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

Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14
DSRI 0.87191.01040.91560.88341.02111.0331.18051.00261.14591.2206
GMI 0.63230.91561.00250.92031.03580.89430.80081.01120.88640.9257
AQI 0.69080.71870.50820.51331.1051.0111.09291.0891.02741.0514
SGI 0.96890.94810.91740.90610.92170.91840.93880.96361.00871.0803
DEPI 0.95140.99480.89890.93930.95760.9230.93970.93810.93751.1457
SGAI 2.53182.70270.79580.7940.78240.77470.59750.61350.59720.5944
LVGI 1.33041.36621.41861.31361.07781.09361.1381.18551.22111.1336
TATA -0.2027-0.1978-0.1954-0.2316-0.0771-0.05620.0180.03050.06510.044
M-score -4.27-4.01-3.86-4.07-2.82-2.84-2.33-2.33-2.09-1.98
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