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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.
During the past 13 years, the highest Beneish M-Score of Ark Restaurants Corp was 23.75. The lowest was -10.10. And the median was -2.84.
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 Ark Restaurants 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 * 0.8916||+||0.528 * 0.9937||+||0.404 * 1.0137||+||0.892 * 1.0197||+||0.115 * 1.1462|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0216||+||4.679 * -0.0711||-||0.327 * 1.0867|
|This Year (Dec16) TTM:||Last Year (Dec15) TTM:|
|Accounts Receivable was $3.7 Mil.|
Revenue was 38.392 + 38.538 + 41.233 + 34.272 = $152.4 Mil.
Gross Profit was 6.088 + 5.957 + 9.374 + 3.225 = $24.6 Mil.
Total Current Assets was $13.2 Mil.
Total Assets was $75.2 Mil.
Property, Plant and Equipment(Net PPE) was $36.9 Mil.
Depreciation, Depletion and Amortization(DDA) was $4.5 Mil.
Selling, General & Admin. Expense(SGA) was $11.7 Mil.
Total Current Liabilities was $17.7 Mil.
Long-Term Debt was $11.1 Mil.
Net Income was 1.734 + 0.987 + 3.367 + -0.646 = $5.4 Mil.
Non Operating Income was 0.028 + -0.009 + 0.217 + 0.16 = $0.4 Mil.
Cash Flow from Operations was 1.824 + 1.314 + 5.256 + 1.993 = $10.4 Mil.
|Accounts Receivable was $4.1 Mil.
Revenue was 36.991 + 40.581 + 40.375 + 31.548 = $149.5 Mil.
Gross Profit was 5.099 + 7.448 + 8.574 + 2.895 = $24.0 Mil.
Total Current Assets was $14.8 Mil.
Total Assets was $68.2 Mil.
Property, Plant and Equipment(Net PPE) was $31.0 Mil.
Depreciation, Depletion and Amortization(DDA) was $4.4 Mil.
Selling, General & Admin. Expense(SGA) was $11.2 Mil.
Total Current Liabilities was $16.7 Mil.
Long-Term Debt was $7.3 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)|
|=||(3.732 / 152.435)||/||(4.105 / 149.495)|
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)|
|=||(24.016 / 149.495)||/||(24.644 / 152.435)|
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 - (13.225 + 36.874) / 75.168)||/||(1 - (14.839 + 30.951) / 68.24)|
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))|
|=||(4.448 / (4.448 + 30.951))||/||(4.54 / (4.54 + 36.874))|
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)|
|=||(11.68 / 152.435)||/||(11.213 / 149.495)|
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)|
|=||((11.071 + 17.659) / 75.168)||/||((7.26 + 16.741) / 68.24)|
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|
|=||(5.442 - 0.396||-||10.387)||/||75.168|
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.
Ark Restaurants Corp has a M-score of -2.91 suggests that the company will not 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
Ark Restaurants Corp Annual Data
Ark Restaurants Corp Quarterly Data