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American Realty Investors Inc (NYSE:ARL)
Beneish M-Score
-2.30 (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 -2.30 suggests that the company is not a manipulator.

ARL' s 10-Year Beneish M-Score Range
Min: -4.6   Max: 26.54
Current: -2.3

-4.6
26.54

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.


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+0.528 * 1.0939+0.404 * 1.2035+0.892 * 0.6112+0.115 * 0.9023
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.2909+4.679 * 0.0911-0.327 * 0.9197
=-2.30

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

This Year (Sep14) TTM:Last Year (Sep13) TTM:
Accounts Receivable was $22.9 Mil.
Revenue was 19.326 + 20.848 + 20.583 + 8.181 = $68.9 Mil.
Gross Profit was 8.56 + 10.529 + 10.266 + 4.185 = $33.5 Mil.
Total Current Assets was $56.1 Mil.
Total Assets was $936.0 Mil.
Property, Plant and Equipment(Net PPE) was $684.1 Mil.
Depreciation, Depletion and Amortization(DDA) was $19.2 Mil.
Selling, General & Admin. Expense(SGA) was $17.7 Mil.
Total Current Liabilities was $132.1 Mil.
Long-Term Debt was $659.1 Mil.
Net Income was -1.319 + 1.518 + 3.55 + 38.974 = $42.7 Mil.
Non Operating Income was -0.286 + -0.48 + 2.319 + -8.42 = $-6.9 Mil.
Cash Flow from Operations was -0.765 + 9.495 + -15.187 + -29.228 = $-35.7 Mil.
Accounts Receivable was $0.0 Mil.
Revenue was 27.482 + 27.182 + 28.122 + 30.006 = $112.8 Mil.
Gross Profit was 13.44 + 14.638 + 14.209 + 17.741 = $60.0 Mil.
Total Current Assets was $9.4 Mil.
Total Assets was $1,065.4 Mil.
Property, Plant and Equipment(Net PPE) was $870.8 Mil.
Depreciation, Depletion and Amortization(DDA) was $21.9 Mil.
Selling, General & Admin. Expense(SGA) was $22.5 Mil.
Total Current Liabilities was $173.4 Mil.
Long-Term Debt was $805.8 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)
=(22.93 / 68.938) / (0 / 112.792)
=0.33261771 / 0
=1

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)
=(10.529 / 112.792) / (8.56 / 68.938)
=0.53220087 / 0.48652412
=1.0939

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 - (56.126 + 684.074) / 935.986) / (1 - (9.425 + 870.787) / 1065.376)
=0.20917621 / 0.17380155
=1.2035

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
=68.938 / 112.792
=0.6112

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))
=(21.948 / (21.948 + 870.787)) / (19.161 / (19.161 + 684.074))
=0.02458512 / 0.02724694
=0.9023

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)
=(17.743 / 68.938) / (22.489 / 112.792)
=0.25737619 / 0.19938471
=1.2909

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)
=((659.121 + 132.065) / 935.986) / ((805.804 + 173.407) / 1065.376)
=0.84529683 / 0.91912245
=0.9197

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
=(42.723 - -6.867 - -35.685) / 935.986
=0.0911

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 -2.30 suggests that the company will not 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

Dec04Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13
DSRI 0.66522.14630.73181.6612011111
GMI 0.88630.98572.64580.89431.03670.84471.07640.89460.85920.9794
AQI 1.16330.99980.88091.35310.5951.01991.11961.12071.08381.151
SGI 1.35670.55890.89980.97031.02821.00950.8550.75371.00980.75
DEPI 0.88741.42161.07180.97981.17090.84910.89880.96820.97490.7942
SGAI 0.62441.68930.59441.73852.02990.90281.0943.55340.27721.1331
LVGI 0.85080.97591.12621.00421.21991.05311.05960.94791.0430.9265
TATA -0.12480.09020.00740.0067-0.0004-0.0326-0.0543-0.04860.00360.1086
M-score -2.95-1.47-1.92-1.91-3.75-2.72-2.82-3.36-2.39-2.17

American Realty Investors Inc Quarterly Data

Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14
DSRI 00.115811101144.38891
GMI 0.89030.91370.83930.85820.87150.86160.97770.99971.04451.0939
AQI 1.1821.1861.08381.06691.06911.08261.1511.16171.21191.2035
SGI 0.74690.73460.94510.99361.01711.05770.75640.70660.67490.6112
DEPI 1.06591.06370.97490.94570.88840.89540.79420.79610.8610.9023
SGAI 3.21633.02830.30330.27910.29990.31271.09261.19191.25571.2909
LVGI 0.99420.99251.0430.99510.98880.99950.92650.92420.93120.9197
TATA -0.0462-0.03680.00310.0010.0180.00960.10860.11240.0890.0911
M-score -4.20-4.01-2.46-2.41-2.31-3.24-2.16-2.1837.64-2.30
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