Switch to:
American Realty Investors Inc (NYSE:ARL)
Beneish M-Score
1.22 (As of Today)

Warning Sign:

Beneish M-Score 1.22 higher than -2.22, which implies that it might have manipulated its financial results.

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 1.22 signals that the company is a manipulator.

ARL' s Beneish M-Score Range Over the Past 10 Years
Min: -5.39   Max: 23.43
Current: 1.22

-5.39
23.43

During the past 13 years, the highest Beneish M-Score of American Realty Investors Inc was 23.43. The lowest was -5.39. And the median was -2.42.


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 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 * 4.5318+0.528 * 0.992+0.404 * 0.8121+0.892 * 1.3217+0.115 * 1.0263
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.6575+4.679 * 0.0424-0.327 * 1.0448
=1.22

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

This Year (Mar16) TTM:Last Year (Mar15) TTM:
Accounts Receivable was $32.4 Mil.
Revenue was 29.205 + 28.965 + 27.826 + 24.241 = $110.2 Mil.
Gross Profit was 13.989 + 12.43 + 13.327 + 12.94 = $52.7 Mil.
Total Current Assets was $73.3 Mil.
Total Assets was $1,107.3 Mil.
Property, Plant and Equipment(Net PPE) was $855.4 Mil.
Depreciation, Depletion and Amortization(DDA) was $22.0 Mil.
Selling, General & Admin. Expense(SGA) was $16.9 Mil.
Total Current Liabilities was $126.1 Mil.
Long-Term Debt was $808.5 Mil.
Net Income was -3.205 + -1.305 + -5.163 + 1.167 = $-8.5 Mil.
Non Operating Income was 1.172 + 10.415 + 1.072 + 3.147 = $15.8 Mil.
Cash Flow from Operations was -5.854 + -6.325 + -1.619 + -57.466 = $-71.3 Mil.
Accounts Receivable was $5.4 Mil.
Revenue was 23.156 + 21.426 + 19.326 + 19.5 = $83.4 Mil.
Gross Profit was 11.488 + 9.979 + 8.56 + 9.517 = $39.5 Mil.
Total Current Assets was $61.2 Mil.
Total Assets was $945.7 Mil.
Property, Plant and Equipment(Net PPE) was $696.6 Mil.
Depreciation, Depletion and Amortization(DDA) was $18.4 Mil.
Selling, General & Admin. Expense(SGA) was $19.5 Mil.
Total Current Liabilities was $122.7 Mil.
Long-Term Debt was $641.3 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)
=(32.397 / 110.237) / (5.409 / 83.408)
=0.29388499 / 0.06484989
=4.5318

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)
=(39.544 / 83.408) / (52.686 / 110.237)
=0.4741032 / 0.47793391
=0.992

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 - (73.3 + 855.371) / 1107.267) / (1 - (61.244 + 696.606) / 945.688)
=0.16129443 / 0.19862576
=0.8121

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
=110.237 / 83.408
=1.3217

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))
=(18.407 / (18.407 + 696.606)) / (22.008 / (22.008 + 855.371))
=0.02574359 / 0.0250838
=1.0263

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)
=(16.937 / 110.237) / (19.49 / 83.408)
=0.1536417 / 0.23367063
=0.6575

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)
=((808.501 + 126.109) / 1107.267) / ((641.257 + 122.726) / 945.688)
=0.84406923 / 0.80785946
=1.0448

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
=(-8.506 - 15.806 - -71.264) / 1107.267
=0.0424

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 1.22 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.

American Realty Investors Inc Annual Data

Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15
DSRI 101111111.7161.0019
GMI 2.64580.89431.03670.84471.07640.89460.85920.97941.09390.9748
AQI 1.11240.77420.81091.00721.11961.12070.90621.37670.99430.8263
SGI 0.89980.97031.02821.00950.8550.75371.00980.750.88591.312
DEPI 1.0231.07811.12120.84910.89880.96820.97490.79421.16691.0436
SGAI 0.59441.73852.02990.90281.0943.55340.27721.13311.19890.6608
LVGI 1.12621.25180.97861.05311.05960.98641.00230.92650.94981.034
TATA 0.0074-0.0034-0.0005-0.0326-0.0543-0.04860.00360.10860.07090.0105
M-score -1.59-3.79-2.67-2.72-2.82-3.37-2.45-2.08-1.54-2.18

American Realty Investors Inc Quarterly Data

Dec13Mar14Jun14Sep14Dec14Mar15Jun15Sep15Dec15Mar16
DSRI 1125.364911.59320.15311.31771.58121.00184.5318
GMI 0.98130.99111.02891.02491.10621.08221.02721.00170.97480.992
AQI 1.37671.16171.21191.20350.99431.0630.76830.72290.82630.8121
SGI 0.99951.08551.18111.33880.95421.01681.08651.19431.3121.3217
DEPI 0.79420.79610.8610.90231.16691.15621.23851.09831.04361.0263
SGAI 1.11441.07090.97440.78641.11341.07970.88950.8670.66080.6575
LVGI 0.92650.92420.93120.91970.94980.94750.97580.98861.0341.0448
TATA 0.10550.10840.090.09130.06920.01880.07530.07140.01150.0424
M-score -1.86-1.8520.63-1.60-1.58-3.07-1.78-1.51-2.181.22
Get WordPress Plugins for easy affiliate links on Stock Tickers and Guru Names | Earn affiliate commissions by embedding GuruFocus Charts
GuruFocus Affiliate Program: Earn up to $400 per referral. ( Learn More)
FEEDBACK