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