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AK Steel Holding Corp (NYSE:AKS)
Beneish M-Score
-2.99 (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 -2.99 suggests that the company is not a manipulator.

AKS' s 10-Year Beneish M-Score Range
Min: -4.27   Max: -0.9
Current: -2.99

-4.27
-0.9

During the past 13 years, the highest Beneish M-Score of AK Steel Holding Corp was -0.90. The lowest was -4.27. And the median was -2.49.


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 * 0.773+0.528 * 0.8609+0.404 * 0.5063+0.892 * 1.2314+0.115 * 1.0396
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.1822+4.679 * -0.0389-0.327 * 1.0836
=-2.99

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

This Year (Jun15) TTM:Last Year (Jun14) TTM:
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 $143 Mil.
Total Current Liabilities was $1,051 Mil.
Long-Term Debt was $2,443 Mil.
Net Income was -64 + -306.3 + 13.5 + -7.2 = $-364 Mil.
Non Operating Income was 1.5 + -273 + -0.9 + -15.3 = $-288 Mil.
Cash Flow from Operations was 86.6 + -2.7 + 57.8 + -49.5 = $92 Mil.
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 $98 Mil.
Total Current Liabilities was $883 Mil.
Long-Term Debt was $1,948 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)
=(567.5 / 7031.7) / (596.2 / 5710.4)
=0.08070595 / 0.104406
=0.773

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)
=(142.3 / 5710.4) / (110.2 / 7031.7)
=0.07207901 / 0.08372086
=0.8609

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 - (1914.3 + 2135.5) / 4335.4) / (1 - (1506 + 1805.3) / 3806.6)
=0.06587627 / 0.13011611
=0.5063

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
=7031.7 / 5710.4
=1.2314

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))
=(210 / (210 + 1805.3)) / (237.9 / (237.9 + 2135.5))
=0.10420285 / 0.10023595
=1.0396

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)
=(143.1 / 7031.7) / (98.3 / 5710.4)
=0.0203507 / 0.01721421
=1.1822

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)
=((2442.5 + 1050.9) / 4335.4) / ((1948.2 + 882.5) / 3806.6)
=0.80578493 / 0.74362949
=1.0836

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
=(-364 - -287.7 - 92.2) / 4335.4
=-0.0389

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 -2.99 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

Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14
DSRI 0.83241.13750.83950.63771.84790.71211.07830.91561.18051.0504
GMI 1.10421.13450.6561.02611.87961.47340.81711.00250.80081.0849
AQI 0.95720.84570.89410.97331.18521.14681.25950.50821.09291.0164
SGI 1.08241.07471.15391.09160.53331.4641.08370.91740.93881.1679
DEPI 1.03520.95470.94010.98610.95131.03821.12550.89890.93971.097
SGAI 0.93280.92740.93260.91651.6160.72312.1870.82510.39790.9815
LVGI 1.08021.00860.84320.93341.0791.13321.12511.41861.1381.1359
TATA -0.02940.0131-0.0536-0.0172-0.03330.00270.0068-0.19540.0180.0508
M-score -2.67-2.21-2.91-2.77-1.87-2.00-2.52-3.86-2.30-2.02

AK Steel Holding Corp Quarterly Data

Mar13Jun13Sep13Dec13Mar14Jun14Sep14Dec14Mar15Jun15
DSRI 0.88341.02111.0331.18051.00261.14591.22061.05040.93570.773
GMI 0.92031.03580.89430.80081.01120.88640.92571.08490.81650.8609
AQI 0.51331.1051.0111.09291.0891.02741.05141.01640.61360.5063
SGI 0.90610.92170.91840.93880.96361.00871.08031.16791.23081.2314
DEPI 0.93930.95760.9230.93970.93810.93751.14571.0971.06781.0396
SGAI 0.7940.78240.77470.39790.3430.26980.28840.66390.84641.1822
LVGI 1.31361.07781.09361.1381.18551.22111.13361.13591.13621.0836
TATA -0.2316-0.0771-0.05620.0180.03050.06510.0440.05080.0385-0.0389
M-score -4.07-2.82-2.84-2.30-2.28-2.04-1.92-1.97-2.42-2.99
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