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

Warning Sign:

Beneish M-Score 0.46 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 0.46 signals that the company is a manipulator.

ARRY' s Beneish M-Score Range Over the Past 10 Years
Min: -707.03   Max: 349.55
Current: 0.46

-707.03
349.55

During the past 13 years, the highest Beneish M-Score of Array BioPharma Inc was 349.55. The lowest was -707.03. And the median was -2.38.


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 * 2.346+0.528 * 0.1741+0.404 * 3.8481+0.892 * 2.6562+0.115 * 2.271
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.4344+4.679 * -0.1347-0.327 * 1.302
=0.46

* 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 $39.3 Mil.
Revenue was 43.205 + 43.047 + 35.43 + 16.197 = $137.9 Mil.
Gross Profit was 37.761 + 37.2 + 29.767 + 9.985 = $114.7 Mil.
Total Current Assets was $155.3 Mil.
Total Assets was $168.9 Mil.
Property, Plant and Equipment(Net PPE) was $6.7 Mil.
Depreciation, Depletion and Amortization(DDA) was $1.5 Mil.
Selling, General & Admin. Expense(SGA) was $36.3 Mil.
Total Current Liabilities was $52.4 Mil.
Long-Term Debt was $113.7 Mil.
Net Income was -25.014 + -22.675 + -24.164 + -20.987 = $-92.8 Mil.
Non Operating Income was 0 + 0 + 0 + 0 = $0.0 Mil.
Cash Flow from Operations was -7.462 + -1.167 + -42.257 + -19.204 = $-70.1 Mil.
Accounts Receivable was $6.3 Mil.
Revenue was 12.32 + 6.601 + 26.919 + 6.069 = $51.9 Mil.
Gross Profit was 5.343 + -5.539 + 13.821 + -6.108 = $7.5 Mil.
Total Current Assets was $191.0 Mil.
Total Assets was $198.2 Mil.
Property, Plant and Equipment(Net PPE) was $5.1 Mil.
Depreciation, Depletion and Amortization(DDA) was $3.7 Mil.
Selling, General & Admin. Expense(SGA) was $31.4 Mil.
Total Current Liabilities was $42.4 Mil.
Long-Term Debt was $107.3 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)
=(39.302 / 137.879) / (6.307 / 51.909)
=0.28504703 / 0.12150109
=2.346

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)
=(7.517 / 51.909) / (114.713 / 137.879)
=0.14481111 / 0.83198312
=0.1741

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 - (155.301 + 6.68) / 168.9) / (1 - (191.047 + 5.05) / 198.207)
=0.04096507 / 0.01064544
=3.8481

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
=137.879 / 51.909
=2.6562

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))
=(3.702 / (3.702 + 5.05)) / (1.529 / (1.529 + 6.68))
=0.42298903 / 0.18625898
=2.271

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)
=(36.267 / 137.879) / (31.433 / 51.909)
=0.26303498 / 0.60554047
=0.4344

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)
=((113.655 + 52.434) / 168.9) / ((107.28 + 42.424) / 198.207)
=0.98335702 / 0.75529119
=1.302

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
=(-92.84 - 0 - -70.09) / 168.9
=-0.1347

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 0.46 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

Jun07Jun08Jun09Jun10Jun11Jun12Jun13Jun14Jun15Jun16
DSRI 240.9641011110.92090.93560.94172.346
GMI 1.25971.25910.43270.79340.83611.2595-6.1458-0.63790.1741
AQI 23.0071.26090.5170.2710.7721.26581.46010.21413.8481
SGI 0.77920.86722.15681.33451.18410.81730.60471.23362.6562
DEPI 0.97750.94830.87450.69911.10270.98060.8490.84132.271
SGAI 1.46651.33280.44050.71170.78961.57951.8461.16310.4344
LVGI 1.89172.91330.96161.50510.86210.70751.02630.6691.302
TATA -0.2985-0.1803-0.60620.15760.10090.2671-0.0994-0.0055-0.1347
M-score 225.35-4.81-4.68-2.00-1.937.97-7.12-3.470.46

Array BioPharma Inc Quarterly Data

Mar14Jun14Sep14Dec14Mar15Jun15Sep15Dec15Mar16Jun16
DSRI 10.935611.85821.16280.64360.94171.23068.804712.67322.346
GMI 1.6873-6.1458-1.2425-25.4678-4.5448-0.6379-1.0508-0.0267-0.09280.1741
AQI 2.88641.46010.57780.45740.30810.21410.32780.39760.52243.8481
SGI 0.94840.60470.4990.73470.74171.23361.8291.50832.34642.6562
DEPI 0.80970.8490.90121.0471.11010.84130.89251.00881.3112.271
SGAI 1.191.84592.35461.70311.83121.16310.74350.85880.50220.4344
LVGI 0.78981.02631.20021.11710.66740.6690.70780.76631.19161.302
TATA 0.0004-0.0994-0.0579-0.2152-0.0565-0.00550.03180.1733-0.0027-0.1347
M-score -1.38-7.125.13-17.92-6.53-3.47-2.615.288.740.46
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