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American Realty Investors Inc (NYSE:ARL)
Beneish M-Score
-2.18 (As of Today)

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 -2.18 signals that the company is a manipulator.

ARL' s Beneish M-Score Range Over the Past 10 Years
Min: -3.89   Max: 2.4
Current: -2.18

-3.89
2.4

During the past 13 years, the highest Beneish M-Score of American Realty Investors Inc was 2.40. The lowest was -3.89. And the median was -2.38.


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 * 1.0018+0.528 * 0.9748+0.404 * 0.8263+0.892 * 1.312+0.115 * 1.0436
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.6608+4.679 * 0.012-0.327 * 1.034
=-2.18

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

This Year (Dec15) TTM:Last Year (Dec14) TTM:
Accounts Receivable was $28.1 Mil.
Revenue was 28.965 + 27.826 + 24.241 + 23.156 = $104.2 Mil.
Gross Profit was 12.43 + 13.327 + 12.94 + 11.488 = $50.2 Mil.
Total Current Assets was $89.1 Mil.
Total Assets was $1,117.4 Mil.
Property, Plant and Equipment(Net PPE) was $853.5 Mil.
Depreciation, Depletion and Amortization(DDA) was $21.4 Mil.
Selling, General & Admin. Expense(SGA) was $16.7 Mil.
Total Current Liabilities was $135.7 Mil.
Long-Term Debt was $804.8 Mil.
Net Income was -1.305 + -5.163 + 1.167 + 3.34 = $-2.0 Mil.
Non Operating Income was 10.415 + 1.072 + 3.147 + 4.494 = $19.1 Mil.
Cash Flow from Operations was -6.325 + -1.619 + -57.466 + 30.901 = $-34.5 Mil.
Accounts Receivable was $21.4 Mil.
Revenue was 21.426 + 19.326 + 19.5 + 19.159 = $79.4 Mil.
Gross Profit was 9.979 + 8.56 + 9.517 + 9.231 = $37.3 Mil.
Total Current Assets was $83.0 Mil.
Total Assets was $965.5 Mil.
Property, Plant and Equipment(Net PPE) was $699.8 Mil.
Depreciation, Depletion and Amortization(DDA) was $18.3 Mil.
Selling, General & Admin. Expense(SGA) was $19.2 Mil.
Total Current Liabilities was $126.9 Mil.
Long-Term Debt was $659.1 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)
=(28.147 / 104.188) / (21.414 / 79.411)
=0.27015587 / 0.26966037
=1.0018

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)
=(13.327 / 79.411) / (12.43 / 104.188)
=0.46954452 / 0.48167735
=0.9748

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 - (89.09 + 853.507) / 1117.368) / (1 - (82.979 + 699.763) / 965.498)
=0.15641311 / 0.18928677
=0.8263

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
=104.188 / 79.411
=1.312

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))
=(18.345 / (18.345 + 699.763)) / (21.418 / (21.418 + 853.507))
=0.0255463 / 0.02447981
=1.0436

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)
=(16.667 / 104.188) / (19.223 / 79.411)
=0.15997044 / 0.24206974
=0.6608

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)
=((804.76 + 135.719) / 1117.368) / ((659.059 + 126.851) / 965.498)
=0.84169137 / 0.81399444
=1.034

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
=(-1.961 - 19.128 - -34.509) / 1117.368
=0.012

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 -2.18 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 01111111.54581.0019
GMI 0.90281.05210.84480.92160.99380.88210.99651.09270.9748
AQI 0.77420.81091.00721.11961.12070.90621.37670.99430.8263
SGI 1.14791.04710.91260.6580.75181.02220.98660.98341.312
DEPI 1.37281.12120.84910.89880.96820.97490.79421.16691.0436
SGAI 2.9460.99611.01233.99370.43960.60151.13021.08090.6608
LVGI 1.25180.97861.05311.05960.98641.00230.92650.94981.034
TATA 0.0011-0.0054-0.0326-0.0558-0.04680.01070.10550.06820.0105
M-score -3.78-2.49-2.83-3.59-2.78-2.45-1.87-1.61-2.18

American Realty Investors Inc Quarterly Data

Sep13Dec13Mar14Jun14Sep14Dec14Mar15Jun15Sep15Dec15
DSRI 01125.364911.59320.15311.31771.58121.0018
GMI 1.00320.98130.99111.02891.02491.10621.08221.02721.00170.9748
AQI 1.08261.37671.16171.21191.20350.99431.0630.76830.72290.8263
SGI 0.77910.99951.08551.18111.33880.95421.01681.08651.19431.312
DEPI 0.89540.79420.79610.8610.90231.16691.15621.23851.09831.0436
SGAI 1.1981.11441.07090.97440.78641.11341.07970.88950.8670.6608
LVGI 0.99950.92650.92420.93120.91970.94980.94750.97580.98861.034
TATA 0.00580.10550.10840.090.09130.06920.01940.07590.07190.012
M-score -3.58-1.86-1.8520.63-1.60-1.58-3.06-1.78-1.51-2.18
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