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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.
Array BioPharma Inc has a M-score of -6.91 suggests that the company is not a manipulator.
During the past 13 years, the highest Beneish M-Score of Array BioPharma Inc was 349.55. The lowest was -7.32. And the median was -2.62.
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 * 0.9356||+||0.528 * -6.1458||+||0.404 * 1.9475||+||0.892 * 0.6047||+||0.115 * 0.849|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.8459||+||4.679 * -0.0976||-||0.327 * 1.0243|
|This Year (Jun14) TTM:||Last Year (Jun13) TTM:|
|Accounts Receivable was $5.43 Mil.|
Revenue was 6.011 + 7.773 + 14.066 + 14.228 = $42.08 Mil.
Gross Profit was -5.43 + -2.983 + 0.956 + 3.57 = $-3.89 Mil.
Total Current Assets was $121.68 Mil.
Total Assets was $139.05 Mil.
Property, Plant and Equipment(Net PPE) was $8.16 Mil.
Depreciation, Depletion and Amortization(DDA) was $4.51 Mil.
Selling, General & Admin. Expense(SGA) was $21.91 Mil.
Total Current Liabilities was $52.73 Mil.
Long-Term Debt was $103.95 Mil.
Net Income was -28.237 + -24.932 + -16.408 + -15.68 = $-85.26 Mil.
Non Operating Income was 0 + 0 + 0 + 0 = $0.00 Mil.
Cash Flow from Operations was -22.238 + -15.129 + -33.203 + -1.112 = $-71.68 Mil.
|Accounts Receivable was $9.60 Mil.
Revenue was 25.415 + 9.955 + 18.377 + 15.833 = $69.58 Mil.
Gross Profit was 18.409 + 1.331 + 10.468 + 9.294 = $39.50 Mil.
Total Current Assets was $121.31 Mil.
Total Assets was $135.99 Mil.
Property, Plant and Equipment(Net PPE) was $10.05 Mil.
Depreciation, Depletion and Amortization(DDA) was $4.35 Mil.
Selling, General & Admin. Expense(SGA) was $19.63 Mil.
Total Current Liabilities was $50.58 Mil.
Long-Term Debt was $99.02 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)|
|=||(5.429 / 42.078)||/||(9.595 / 69.58)|
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)|
|=||(-2.983 / 69.58)||/||(-5.43 / 42.078)|
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 - (121.676 + 8.157) / 139.053)||/||(1 - (121.309 + 10.049) / 135.988)|
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))|
|=||(4.35 / (4.35 + 10.049))||/||(4.506 / (4.506 + 8.157))|
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)|
|=||(21.907 / 42.078)||/||(19.625 / 69.58)|
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)|
|=||((103.952 + 52.733) / 139.053)||/||((99.021 + 50.577) / 135.988)|
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|
|=||(-85.257 - 0||-||-71.682)||/||139.053|
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 -6.91 suggests that the company will not 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
Array BioPharma Inc Annual Data
Array BioPharma Inc Quarterly Data