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Beneish M-Score 24.60 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 24.60 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 -4.60. And the median was -2.78.
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 * 29.8934||+||0.528 * 1.0209||+||0.404 * 1.2119||+||0.892 * 1.0022||+||0.115 * 0.861|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.1355||+||4.679 * 0.089||-||0.327 * 0.9312|
|This Year (Jun14) TTM:||Last Year (Jun13) TTM:|
|Accounts Receivable was $26.1 Mil.|
Revenue was 20.848 + 20.583 + 8.181 + 27.482 = $77.1 Mil.
Gross Profit was 10.529 + 10.266 + 4.185 + 13.44 = $38.4 Mil.
Total Current Assets was $66.0 Mil.
Total Assets was $922.2 Mil.
Property, Plant and Equipment(Net PPE) was $671.2 Mil.
Depreciation, Depletion and Amortization(DDA) was $19.8 Mil.
Selling, General & Admin. Expense(SGA) was $18.4 Mil.
Total Current Liabilities was $136.9 Mil.
Long-Term Debt was $645.4 Mil.
Net Income was 1.518 + 3.55 + 38.974 + -6.426 = $37.6 Mil.
Non Operating Income was -0.48 + 2.319 + -8.42 + -2.621 = $-9.2 Mil.
Cash Flow from Operations was 9.495 + -15.187 + -29.228 + -0.333 = $-35.3 Mil.
|Accounts Receivable was $0.9 Mil.
Revenue was 20.402 + 20.35 + 8.403 + 27.771 = $76.9 Mil.
Gross Profit was 10.986 + 10.368 + 3.907 + 13.877 = $39.1 Mil.
Total Current Assets was $10.2 Mil.
Total Assets was $1,058.6 Mil.
Property, Plant and Equipment(Net PPE) was $873.1 Mil.
Depreciation, Depletion and Amortization(DDA) was $22.1 Mil.
Selling, General & Admin. Expense(SGA) was $16.2 Mil.
Total Current Liabilities was $161.4 Mil.
Long-Term Debt was $803.0 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)|
|=||(26.094 / 77.094)||/||(0.871 / 76.926)|
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)|
|=||(10.266 / 76.926)||/||(10.529 / 77.094)|
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 - (65.986 + 671.16) / 922.225)||/||(1 - (10.204 + 873.107) / 1058.613)|
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))|
|=||(22.14 / (22.14 + 873.107))||/||(19.848 / (19.848 + 671.16))|
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)|
|=||(18.431 / 77.094)||/||(16.196 / 76.926)|
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)|
|=||((645.427 + 136.905) / 922.225)||/||((802.997 + 161.426) / 1058.613)|
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|
|=||(37.616 - -9.202||-||-35.253)||/||922.225|
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 24.60 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