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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.
American Realty Investors Inc has a M-score of -1.93 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 -2.79.
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 * 0.9874||+||0.404 * 1.1617||+||0.892 * 0.9955||+||0.115 * 0.7961|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.1541||+||4.679 * 0.1115||-||0.327 * 0.9242|
|This Year (Mar14) TTM:||Last Year (Mar13) TTM:|
|Accounts Receivable was $34.8 Mil.|
Revenue was 20.583 + 8.181 + 27.482 + 27.182 = $83.4 Mil.
Gross Profit was 10.266 + 4.185 + 13.44 + 14.638 = $42.5 Mil.
Total Current Assets was $80.9 Mil.
Total Assets was $940.2 Mil.
Property, Plant and Equipment(Net PPE) was $683.6 Mil.
Depreciation, Depletion and Amortization(DDA) was $21.0 Mil.
Selling, General & Admin. Expense(SGA) was $17.6 Mil.
Total Current Liabilities was $135.5 Mil.
Long-Term Debt was $666.1 Mil.
Net Income was 3.55 + 38.974 + -6.426 + 8.354 = $44.5 Mil.
Non Operating Income was 2.319 + -8.42 + -2.621 + -4.216 = $-12.9 Mil.
Cash Flow from Operations was -15.187 + -29.228 + -0.333 + -2.674 = $-47.4 Mil.
|Accounts Receivable was $0.0 Mil.
Revenue was 20.35 + 8.403 + 27.771 + 27.284 = $83.8 Mil.
Gross Profit was 10.368 + 3.907 + 13.877 + 14.031 = $42.2 Mil.
Total Current Assets was $8.3 Mil.
Total Assets was $1,090.4 Mil.
Property, Plant and Equipment(Net PPE) was $906.8 Mil.
Depreciation, Depletion and Amortization(DDA) was $22.0 Mil.
Selling, General & Admin. Expense(SGA) was $15.3 Mil.
Total Current Liabilities was $157.4 Mil.
Long-Term Debt was $848.6 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)|
|=||(34.751 / 83.428)||/||(0 / 83.808)|
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)|
|=||(4.185 / 83.808)||/||(10.266 / 83.428)|
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 - (80.871 + 683.614) / 940.156)||/||(1 - (8.262 + 906.768) / 1090.419)|
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))|
|=||(22.006 / (22.006 + 906.768))||/||(20.971 / (20.971 + 683.614))|
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)|
|=||(17.563 / 83.428)||/||(15.287 / 83.808)|
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)|
|=||((666.072 + 135.548) / 940.156)||/||((848.624 + 157.397) / 1090.419)|
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|
|=||(44.452 - -12.938||-||-47.422)||/||940.156|
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 -1.93 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