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American Realty Investors Inc (NYSE:ARL)
Beneish M-Score
-3.17 (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 -3.17 suggests that the company is not a manipulator.

ARL' s Beneish M-Score Range Over the Past 10 Years
Min: -5.39   Max: 23.43
Current: -3.17

-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 -2.44.


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 * 0.1289+0.528 * 1.0281+0.404 * 1.0003+0.892 * 1.3254+0.115 * 0.9644
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.7601+4.679 * -0.0479-0.327 * 1.0202
=-3.17

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

This Year (Jun16) TTM:Last Year (Jun15) TTM:
Accounts Receivable was USD 6.4 Mil.
Revenue was 30.834 + 29.205 + 28.965 + 27.826 = USD 116.8 Mil.
Gross Profit was 15.643 + 13.989 + 12.43 + 13.327 = USD 55.4 Mil.
Total Current Assets was USD 55.7 Mil.
Total Assets was USD 1,131.7 Mil.
Property, Plant and Equipment(Net PPE) was USD 901.4 Mil.
Depreciation, Depletion and Amortization(DDA) was USD 22.2 Mil.
Selling, General & Admin. Expense(SGA) was USD 18.1 Mil.
Total Current Liabilities was USD 128.3 Mil.
Long-Term Debt was USD 827.4 Mil.
Net Income was 2.489 + -3.205 + -1.305 + -5.163 = USD -7.2 Mil.
Non Operating Income was 7.918 + 1.172 + 10.415 + 1.072 = USD 20.6 Mil.
Cash Flow from Operations was 40.266 + -5.854 + -6.325 + -1.619 = USD 26.5 Mil.
Accounts Receivable was USD 37.4 Mil.
Revenue was 24.241 + 23.156 + 21.426 + 19.326 = USD 88.1 Mil.
Gross Profit was 12.94 + 11.488 + 9.979 + 8.56 = USD 43.0 Mil.
Total Current Assets was USD 108.7 Mil.
Total Assets was USD 1,076.6 Mil.
Property, Plant and Equipment(Net PPE) was USD 801.9 Mil.
Depreciation, Depletion and Amortization(DDA) was USD 19.0 Mil.
Selling, General & Admin. Expense(SGA) was USD 18.0 Mil.
Total Current Liabilities was USD 116.5 Mil.
Long-Term Debt was USD 774.7 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)
=(6.385 / 116.83) / (37.36 / 88.149)
=0.05465206 / 0.42382784
=0.1289

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)
=(42.967 / 88.149) / (55.389 / 116.83)
=0.48743605 / 0.47409912
=1.0281

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 - (55.725 + 901.404) / 1131.675) / (1 - (108.7 + 801.914) / 1076.618)
=0.15423686 / 0.15419025
=1.0003

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
=116.83 / 88.149
=1.3254

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))
=(19.04 / (19.04 + 801.914)) / (22.212 / (22.212 + 901.404))
=0.02319253 / 0.02404896
=0.9644

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)
=(18.131 / 116.83) / (17.998 / 88.149)
=0.1551913 / 0.20417702
=0.7601

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)
=((827.369 + 128.349) / 1131.675) / ((774.669 + 116.549) / 1076.618)
=0.84451631 / 0.82779407
=1.0202

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
=(-7.184 - 20.577 - 26.468) / 1131.675
=-0.0479

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 -3.17 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

Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15
DSRI 101111111.54581.0019
GMI 4.28050.90281.05210.84480.92160.99380.88210.99651.09270.9748
AQI 1.11240.77420.81091.00721.11961.12070.90621.37670.99430.8263
SGI 1.19831.14791.04710.91260.6580.75181.02220.98660.98341.312
DEPI 0.80341.37281.12120.84910.89880.96820.97490.79421.16691.0436
SGAI 0.43962.9460.99611.01233.99370.43960.60151.13021.08090.6608
LVGI 1.12621.25180.97861.05311.05960.98641.00230.92650.94981.034
TATA -0.00720.0011-0.0054-0.0326-0.0558-0.04680.01070.10550.06820.0105
M-score -0.53-3.78-2.49-2.83-3.59-2.78-2.45-1.87-1.61-2.18

American Realty Investors Inc Quarterly Data

Mar14Jun14Sep14Dec14Mar15Jun15Sep15Dec15Mar16Jun16
DSRI 125.364911.59320.15311.31771.58121.00184.53180.1289
GMI 0.99111.02891.02491.10621.08221.02721.00170.97480.9921.0281
AQI 1.16171.21191.20350.99431.0630.76830.72290.82630.81211.0003
SGI 1.08551.18111.33880.95421.01681.08651.19431.3121.32171.3254
DEPI 0.79610.8610.90231.16691.15621.23851.09831.04361.02630.9644
SGAI 1.07090.97440.78641.11341.07970.88950.8670.66080.65750.7601
LVGI 0.92420.93120.91970.94980.94750.97580.98861.0341.04481.0202
TATA 0.10840.090.09130.06920.01880.07530.07140.01150.0424-0.0479
M-score -1.8520.63-1.60-1.58-3.07-1.78-1.51-2.181.22-3.17
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