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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 26.54. The lowest was -4.60. And the median was -2.77.
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 * 0.1506||+||0.528 * 1.0723||+||0.404 * 1.063||+||0.892 * 1.0332||+||0.115 * 1.1562|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0625||+||4.679 * 0.0212||-||0.327 * 0.9475|
|This Year (Mar15) TTM:||Last Year (Mar14) TTM:|
|Accounts Receivable was $5.41 Mil.|
Revenue was 23.156 + 21.426 + 19.326 + 20.848 = $84.76 Mil.
Gross Profit was 11.488 + 9.979 + 8.56 + 10.529 = $40.56 Mil.
Total Current Assets was $61.24 Mil.
Total Assets was $945.69 Mil.
Property, Plant and Equipment(Net PPE) was $696.61 Mil.
Depreciation, Depletion and Amortization(DDA) was $18.41 Mil.
Selling, General & Admin. Expense(SGA) was $19.49 Mil.
Total Current Liabilities was $122.73 Mil.
Long-Term Debt was $641.26 Mil.
Net Income was 3.34 + 27.136 + -1.319 + 1.518 = $30.68 Mil.
Non Operating Income was 4.494 + -1.188 + -0.286 + -0.48 = $2.54 Mil.
Cash Flow from Operations was 30.901 + -31.511 + -0.765 + 9.495 = $8.12 Mil.
|Accounts Receivable was $34.75 Mil.
Revenue was 19.159 + 22.94 + 19.53 + 20.402 = $82.03 Mil.
Gross Profit was 9.231 + 12.729 + 9.143 + 10.986 = $42.09 Mil.
Total Current Assets was $80.87 Mil.
Total Assets was $940.16 Mil.
Property, Plant and Equipment(Net PPE) was $683.61 Mil.
Depreciation, Depletion and Amortization(DDA) was $20.97 Mil.
Selling, General & Admin. Expense(SGA) was $17.75 Mil.
Total Current Liabilities was $135.55 Mil.
Long-Term Debt was $666.07 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)|
|=||(5.409 / 84.756)||/||(34.751 / 82.031)|
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)|
|=||(9.979 / 82.031)||/||(11.488 / 84.756)|
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 - (61.244 + 696.606) / 945.688)||/||(1 - (80.871 + 683.614) / 940.156)|
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))|
|=||(20.971 / (20.971 + 683.614))||/||(18.407 / (18.407 + 696.606))|
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)|
|=||(19.491 / 84.756)||/||(17.754 / 82.031)|
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)|
|=||((641.257 + 122.726) / 945.688)||/||((666.072 + 135.548) / 940.156)|
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|
|=||(30.675 - 2.54||-||8.12)||/||945.688|
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 -3.04 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
American Realty Investors Inc Annual Data
American Realty Investors Inc Quarterly Data