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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.
American Realty Investors, Inc. has a M-score of -1.85 signals that the company is a manipulator.
During the past 13 years, the highest Beneish M-Score of American Realty Investors, Inc. was 26.54. The lowest was -12.03. And the median was -2.81.
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 American Realty Investors, Inc. 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||+||0.528 * 0.9881||+||0.404 * 1.3767||+||0.892 * 0.9942||+||0.115 * 0.7942|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.1203||+||4.679 * 0.1086||-||0.327 * 0.9265|
|This Year (Dec13) TTM:||Last Year (Dec12) TTM:|
|Accounts Receivable was $14.1 Mil.|
Revenue was 8.181 + 27.482 + 27.182 + 28.122 = $91.0 Mil.
Gross Profit was 4.185 + 13.44 + 14.638 + 14.209 = $46.5 Mil.
Total Current Assets was $63.5 Mil.
Total Assets was $943.3 Mil.
Property, Plant and Equipment(Net PPE) was $700.3 Mil.
Depreciation, Depletion and Amortization(DDA) was $21.5 Mil.
Selling, General & Admin. Expense(SGA) was $18.1 Mil.
Total Current Liabilities was $149.4 Mil.
Long-Term Debt was $659.0 Mil.
Net Income was 38.974 + -6.426 + 8.354 + 0.374 = $41.3 Mil.
Non Operating Income was -8.42 + -2.621 + -4.216 + -3.745 = $-19.0 Mil.
Cash Flow from Operations was -29.228 + -0.333 + -3.531 + -9.07 = $-42.2 Mil.
|Accounts Receivable was $0.0 Mil.
Revenue was 8.403 + 27.771 + 27.284 + 28.044 = $91.5 Mil.
Gross Profit was 3.907 + 13.877 + 14.031 + 14.376 = $46.2 Mil.
Total Current Assets was $47.9 Mil.
Total Assets was $1,135.3 Mil.
Property, Plant and Equipment(Net PPE) was $930.4 Mil.
Depreciation, Depletion and Amortization(DDA) was $22.6 Mil.
Selling, General & Admin. Expense(SGA) was $16.3 Mil.
Total Current Liabilities was $180.4 Mil.
Long-Term Debt was $869.9 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)|
|=||(14.086 / 90.967)||/||(0 / 91.502)|
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)|
|=||(13.44 / 91.502)||/||(4.185 / 90.967)|
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 - (63.452 + 700.294) / 943.322)||/||(1 - (47.917 + 930.433) / 1135.345)|
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))|
|=||(22.563 / (22.563 + 930.433))||/||(21.518 / (21.518 + 700.294))|
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)|
|=||(18.108 / 90.967)||/||(16.259 / 91.502)|
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)|
|=||((659.042 + 149.419) / 943.322)||/||((869.857 + 180.384) / 1135.345)|
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|
|=||(41.276 - -19.002||-||-42.162)||/||943.322|
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.
American Realty Investors, Inc. has a M-score of -1.85 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
American Realty Investors, Inc. Annual Data
American Realty Investors, Inc. Quarterly Data