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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 American Realty Investors Inc was 39.14. The lowest was -4.60. And the median was -2.68.
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 * 1.2928||+||0.528 * 0.9637||+||0.404 * 0.7229||+||0.892 * 1.4607||+||0.115 * 1.0983|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.719||+||4.679 * 0.0743||-||0.327 * 0.9886|
|This Year (Sep15) TTM:||Last Year (Sep14) TTM:|
|Accounts Receivable was $43.30 Mil.|
Revenue was 27.826 + 24.241 + 23.156 + 21.426 = $96.65 Mil.
Gross Profit was 13.327 + 12.94 + 11.488 + 9.979 = $47.73 Mil.
Total Current Assets was $97.50 Mil.
Total Assets was $1,087.11 Mil.
Property, Plant and Equipment(Net PPE) was $825.21 Mil.
Depreciation, Depletion and Amortization(DDA) was $20.99 Mil.
Selling, General & Admin. Expense(SGA) was $18.62 Mil.
Total Current Liabilities was $118.08 Mil.
Long-Term Debt was $790.36 Mil.
Net Income was -5.163 + 1.167 + 3.34 + 27.136 = $26.48 Mil.
Non Operating Income was 1.072 + 3.147 + 4.494 + -3.266 = $5.45 Mil.
Cash Flow from Operations was -1.619 + -57.466 + 30.901 + -31.511 = $-59.70 Mil.
|Accounts Receivable was $22.93 Mil.
Revenue was 19.326 + 19.5 + 19.159 + 8.181 = $66.17 Mil.
Gross Profit was 8.56 + 9.517 + 9.231 + 4.185 = $31.49 Mil.
Total Current Assets was $56.13 Mil.
Total Assets was $935.99 Mil.
Property, Plant and Equipment(Net PPE) was $684.07 Mil.
Depreciation, Depletion and Amortization(DDA) was $19.16 Mil.
Selling, General & Admin. Expense(SGA) was $17.73 Mil.
Total Current Liabilities was $132.07 Mil.
Long-Term Debt was $659.12 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)|
|=||(43.301 / 96.649)||/||(22.93 / 66.166)|
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)|
|=||(12.94 / 66.166)||/||(13.327 / 96.649)|
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 - (97.504 + 825.211) / 1087.111)||/||(1 - (56.126 + 684.074) / 935.986)|
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))|
|=||(19.161 / (19.161 + 684.074))||/||(20.992 / (20.992 + 825.211))|
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)|
|=||(18.624 / 96.649)||/||(17.732 / 66.166)|
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)|
|=||((790.363 + 118.084) / 1087.111)||/||((659.121 + 132.065) / 935.986)|
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|
|=||(26.48 - 5.447||-||-59.695)||/||1087.111|
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 -1.52 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