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AK Steel Holding Corp (NYSE:AKS)
Beneish M-Score
-2.02 (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 -2.02 signals that the company is a manipulator.

AKS' s 10-Year Beneish M-Score Range
Min: -3.86   Max: -0.9
Current: -2.02

-3.86
-0.9

During the past 13 years, the highest Beneish M-Score of AK Steel Holding Corp was -0.90. The lowest was -3.86. And the median was -2.41.


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 * 1.0504+0.528 * 1.0849+0.404 * 1.0164+0.892 * 1.1679+0.115 * 1.097
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9815+4.679 * 0.0508-0.327 * 1.1359
=-2.02

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

This Year (Dec14) TTM:Last Year (Dec13) TTM:
Accounts Receivable was $644 Mil.
Revenue was 1997.6 + 1593.8 + 1530.8 + 1383.5 = $6,506 Mil.
Gross Profit was 181.3 + 154.9 + 113.9 + 47.9 = $498 Mil.
Total Current Assets was $2,026 Mil.
Total Assets was $4,859 Mil.
Property, Plant and Equipment(Net PPE) was $2,213 Mil.
Depreciation, Depletion and Amortization(DDA) was $222 Mil.
Selling, General & Admin. Expense(SGA) was $157 Mil.
Total Current Liabilities was $1,125 Mil.
Long-Term Debt was $2,453 Mil.
Net Income was 13.5 + -7.2 + -17.1 + -86.1 = $-97 Mil.
Non Operating Income was -0.9 + -15.3 + -3 + -1.9 = $-21 Mil.
Cash Flow from Operations was 57.8 + -49.5 + -206.1 + -125 = $-323 Mil.
Accounts Receivable was $525 Mil.
Revenue was 1464.8 + 1331.3 + 1404.5 + 1369.8 = $5,570 Mil.
Gross Profit was 140.9 + 108.9 + 95.3 + 117.5 = $463 Mil.
Total Current Assets was $1,273 Mil.
Total Assets was $3,606 Mil.
Property, Plant and Equipment(Net PPE) was $1,880 Mil.
Depreciation, Depletion and Amortization(DDA) was $209 Mil.
Selling, General & Admin. Expense(SGA) was $137 Mil.
Total Current Liabilities was $831 Mil.
Long-Term Debt was $1,506 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)
=(644.3 / 6505.7) / (525.2 / 5570.4)
=0.09903623 / 0.09428407
=1.0504

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)
=(154.9 / 5570.4) / (181.3 / 6505.7)
=0.0830461 / 0.07654826
=1.0849

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 - (2025.7 + 2213.2) / 4858.5) / (1 - (1273.2 + 1880.1) / 3605.7)
=0.12752907 / 0.12546801
=1.0164

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
=6505.7 / 5570.4
=1.1679

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))
=(209.2 / (209.2 + 1880.1)) / (222.3 / (222.3 + 2213.2))
=0.10012923 / 0.09127489
=1.097

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)
=(156.7 / 6505.7) / (136.7 / 5570.4)
=0.02408657 / 0.02454043
=0.9815

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)
=((2452.5 + 1125.2) / 4858.5) / ((1506.2 + 831.4) / 3605.7)
=0.73637954 / 0.64830685
=1.1359

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
=(-96.9 - -21.1 - -322.8) / 4858.5
=0.0508

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 -2.02 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

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

Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14Dec14
DSRI 1.01040.91560.88341.02111.0331.18051.00261.14591.22061.0504
GMI 0.91561.00250.92031.03580.89430.80081.01120.88640.92571.0849
AQI 0.71870.50820.51331.1051.0111.09291.0891.02741.05141.0164
SGI 0.94810.91740.90610.92170.91840.93880.96361.00871.08031.1679
DEPI 0.99480.89890.93930.95760.9230.93970.93810.93751.14571.097
SGAI 2.70270.79580.7940.78240.77470.39790.41680.40890.41840.9815
LVGI 1.36621.41861.31361.07781.09361.1381.18551.22111.13361.1359
TATA -0.1978-0.1954-0.2316-0.0771-0.05620.0180.03050.06510.0440.0508
M-score -4.01-3.86-4.07-2.82-2.84-2.30-2.29-2.06-1.94-2.02
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