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Array BioPharma Inc (NAS:ARRY)
Beneish M-Score
8.70 (As of Today)

Warning Sign:

Beneish M-Score 8.7 higher than -2.22, which implies that it might have manipulated its financial results.

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.

Array BioPharma Inc has a M-score of 8.70 signals that the company is a manipulator.

ARRY' s Beneish M-Score Range Over the Past 10 Years
Min: -10000000   Max: 10000000
Current: 8.7

-10000000
10000000

During the past 13 years, the highest Beneish M-Score of Array BioPharma Inc was 10000000.00. The lowest was -10000000.00. And the median was -2.65.


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 Array BioPharma 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 * 12.6732+0.528 * -0.0928+0.404 * 0.5224+0.892 * 2.3464+0.115 * 1.311
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.5022+4.679 * -0.011-0.327 * 1.1916
=8.70

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

This Year (Mar16) TTM:Last Year (Mar15) TTM:
Accounts Receivable was $62.9 Mil.
Revenue was 43.047 + 35.43 + 16.197 + 12.32 = $107.0 Mil.
Gross Profit was 37.2 + 29.767 + 9.985 + 5.343 = $82.3 Mil.
Total Current Assets was $187.5 Mil.
Total Assets was $196.2 Mil.
Property, Plant and Equipment(Net PPE) was $6.5 Mil.
Depreciation, Depletion and Amortization(DDA) was $2.2 Mil.
Selling, General & Admin. Expense(SGA) was $34.1 Mil.
Total Current Liabilities was $59.5 Mil.
Long-Term Debt was $112.0 Mil.
Net Income was -22.675 + -24.164 + -20.987 + -12.734 = $-80.6 Mil.
Non Operating Income was 0 + 0 + 0 + 11.494 = $11.5 Mil.
Cash Flow from Operations was -1.167 + -42.257 + -19.204 + -27.265 = $-89.9 Mil.
Accounts Receivable was $2.1 Mil.
Revenue was 6.601 + 26.919 + 6.069 + 6.011 = $45.6 Mil.
Gross Profit was -5.539 + 13.821 + -6.108 + -5.43 = $-3.3 Mil.
Total Current Assets was $196.6 Mil.
Total Assets was $208.4 Mil.
Property, Plant and Equipment(Net PPE) was $7.5 Mil.
Depreciation, Depletion and Amortization(DDA) was $3.7 Mil.
Selling, General & Admin. Expense(SGA) was $28.9 Mil.
Total Current Liabilities was $44.9 Mil.
Long-Term Debt was $108.0 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)
=(62.921 / 106.994) / (2.116 / 45.6)
=0.58807971 / 0.04640351
=12.6732

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)
=(29.767 / 45.6) / (37.2 / 106.994)
=-0.07140351 / 0.76915528
=-0.0928

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 - (187.525 + 6.498) / 196.184) / (1 - (196.595 + 7.455) / 208.445)
=0.01101517 / 0.0210847
=0.5224

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
=106.994 / 45.6
=2.3464

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))
=(3.706 / (3.706 + 7.455)) / (2.204 / (2.204 + 6.498))
=0.3320491 / 0.25327511
=1.311

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)
=(34.071 / 106.994) / (28.915 / 45.6)
=0.31843842 / 0.63410088
=0.5022

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)
=((111.999 + 59.48) / 196.184) / ((107.985 + 44.917) / 208.445)
=0.8740723 / 0.73353642
=1.1916

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
=(-80.56 - 11.494 - -89.893) / 196.184
=-0.011

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.

Array BioPharma Inc has a M-score of 8.70 signals that the company is likely to 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.

Array BioPharma Inc Annual Data

Jun06Jun07Jun08Jun09Jun10Jun11Jun12Jun13Jun14Jun15
DSRI 2.0209240.9641011110.92090.93560.9417
GMI 1.36771.25971.25910.43270.79340.83611.2595-6.1458-0.6379
AQI 023.0071.26090.5170.2710.7721.26581.46010.2141
SGI 0.98890.77920.86722.15681.33451.18410.81730.60471.2336
DEPI 0.82110.97750.94830.87450.69911.10270.98060.8490.8413
SGAI 1.48771.46651.33280.44050.71170.78961.57951.8461.1631
LVGI 1.58181.89172.91330.96161.50510.86210.70751.02630.669
TATA -0.1499-0.2985-0.1803-0.60620.15740.10090.2671-0.0994-0.0138
M-score -2.76225.35-4.81-4.68-2.00-1.937.97-7.12-3.51

Array BioPharma Inc Quarterly Data

Dec13Mar14Jun14Sep14Dec14Mar15Jun15Sep15Dec15Mar16
DSRI 110.935611.85821.16280.64360.94171.23068.804712.6732
GMI 1.70171.6873-6.1458-1.2425-25.4678-4.5448-0.6379-1.0508-0.0267-0.0928
AQI 2.9032.88641.46010.57780.45740.30810.21410.32780.39760.5224
SGI 0.86050.94840.60470.4990.73470.74171.23361.8291.50832.3464
DEPI 0.85880.80970.8490.90121.0471.11010.84130.89251.00881.311
SGAI 1.42031.191.84592.35461.70311.83121.16310.74350.85880.5022
LVGI 0.8470.78981.02631.20021.11710.66740.6690.70780.76631.1916
TATA 0.07160.0004-0.0994-0.0579-0.2152-0.0565-0.01380.02310.1651-0.011
M-score -1.17-1.38-7.125.13-17.92-6.53-3.51-2.655.248.70
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