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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 2.40. The lowest was -3.51. And the median was -2.44.
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 * 1.5395||+||0.528 * 1.0852||+||0.404 * 0.9943||+||0.892 * 0.9875||+||0.115 * 1.1669|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0764||+||4.679 * 0.0709||-||0.327 * 0.9498|
|This Year (Dec14) TTM:||Last Year (Dec13) TTM:|
|Accounts Receivable was $21.41 Mil.|
Revenue was 21.426 + 19.326 + 20.848 + 20.583 = $82.18 Mil.
Gross Profit was 9.979 + 8.56 + 10.529 + 10.266 = $39.33 Mil.
Total Current Assets was $82.98 Mil.
Total Assets was $965.50 Mil.
Property, Plant and Equipment(Net PPE) was $699.76 Mil.
Depreciation, Depletion and Amortization(DDA) was $18.35 Mil.
Selling, General & Admin. Expense(SGA) was $19.23 Mil.
Total Current Liabilities was $126.85 Mil.
Long-Term Debt was $659.06 Mil.
Net Income was 27.136 + -1.319 + 1.518 + 3.55 = $30.89 Mil.
Non Operating Income was -1.188 + -0.286 + -0.48 + 2.319 = $0.37 Mil.
Cash Flow from Operations was -31.511 + -0.765 + 9.495 + -15.187 = $-37.97 Mil.
|Accounts Receivable was $14.09 Mil.
Revenue was 22.94 + 19.53 + 20.402 + 20.35 = $83.22 Mil.
Gross Profit was 12.729 + 9.143 + 10.986 + 10.368 = $43.23 Mil.
Total Current Assets was $63.45 Mil.
Total Assets was $943.32 Mil.
Property, Plant and Equipment(Net PPE) was $700.29 Mil.
Depreciation, Depletion and Amortization(DDA) was $21.52 Mil.
Selling, General & Admin. Expense(SGA) was $18.09 Mil.
Total Current Liabilities was $149.42 Mil.
Long-Term Debt was $659.04 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)|
|=||(21.414 / 82.183)||/||(14.086 / 83.222)|
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)|
|=||(8.56 / 83.222)||/||(9.979 / 82.183)|
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 - (82.979 + 699.763) / 965.498)||/||(1 - (63.452 + 700.294) / 943.322)|
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))|
|=||(21.518 / (21.518 + 700.294))||/||(18.345 / (18.345 + 699.763))|
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)|
|=||(19.234 / 82.183)||/||(18.094 / 83.222)|
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)|
|=||((659.059 + 126.851) / 965.498)||/||((659.042 + 149.419) / 943.322)|
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|
|=||(30.885 - 0.365||-||-37.968)||/||965.498|
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 -1.60 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