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GuruFocus has detected 6 Warning Signs with Array BioPharma Inc $ARRY.
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Array BioPharma Inc (NAS:ARRY)
Beneish M-Score
-2.22 (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.

Array BioPharma Inc has a M-score of -2.22 suggests that the company is not a manipulator.

ARRY' s Beneish M-Score Range Over the Past 10 Years
Min: -10000000   Max: 10000000
Current: -2.22

-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 -2.61.


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 * 0.9687+0.528 * 0.4532+0.404 * 0.824+0.892 * 2.5945+0.115 * 2.2835
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.443+4.679 * -0.1994-0.327 * 1.2714
=-2.22

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

This Year (Sep16) TTM:Last Year (Sep15) TTM:
Accounts Receivable was $33.9 Mil.
Revenue was 39.271 + 43.205 + 43.047 + 35.43 = $161.0 Mil.
Gross Profit was 30.426 + 37.761 + 37.2 + 29.767 = $135.2 Mil.
Total Current Assets was $158.0 Mil.
Total Assets was $166.9 Mil.
Property, Plant and Equipment(Net PPE) was $7.3 Mil.
Depreciation, Depletion and Amortization(DDA) was $1.5 Mil.
Selling, General & Admin. Expense(SGA) was $36.8 Mil.
Total Current Liabilities was $64.2 Mil.
Long-Term Debt was $115.4 Mil.
Net Income was -28.608 + -25.014 + -22.675 + -24.164 = $-100.5 Mil.
Non Operating Income was -1.7 + 0 + 0 + 0 = $-1.7 Mil.
Cash Flow from Operations was -14.605 + -7.462 + -1.167 + -42.257 = $-65.5 Mil.
Accounts Receivable was $13.5 Mil.
Revenue was 16.197 + 12.32 + 6.601 + 26.919 = $62.0 Mil.
Gross Profit was 9.985 + 5.343 + -5.539 + 13.821 = $23.6 Mil.
Total Current Assets was $179.6 Mil.
Total Assets was $186.8 Mil.
Property, Plant and Equipment(Net PPE) was $5.0 Mil.
Depreciation, Depletion and Amortization(DDA) was $3.3 Mil.
Selling, General & Admin. Expense(SGA) was $32.0 Mil.
Total Current Liabilities was $49.3 Mil.
Long-Term Debt was $108.8 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)
=(33.938 / 160.953) / (13.504 / 62.037)
=0.21085659 / 0.21767655
=0.9687

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)
=(23.61 / 62.037) / (135.154 / 160.953)
=0.38057933 / 0.83971097
=0.4532

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 - (158.019 + 7.251) / 166.861) / (1 - (179.603 + 4.988) / 186.752)
=0.00953488 / 0.0115715
=0.824

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
=160.953 / 62.037
=2.5945

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))
=(3.299 / (3.299 + 4.988)) / (1.531 / (1.531 + 7.251))
=0.3980934 / 0.17433386
=2.2835

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)
=(36.771 / 160.953) / (31.992 / 62.037)
=0.228458 / 0.51569225
=0.443

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)
=((115.353 + 64.213) / 166.861) / ((108.813 + 49.261) / 186.752)
=1.07614122 / 0.84643806
=1.2714

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
=(-100.461 - -1.7 - -65.491) / 166.861
=-0.1994

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 -2.22 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 local exchange's 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

Jun14Sep14Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16
DSRI 0.935611.85821.16280.64360.94171.23068.804712.67322.3460.9687
GMI -6.1458-1.2425-25.4678-4.5448-0.6379-1.0508-0.0267-0.09280.17410.4532
AQI 1.46010.57780.45740.30810.21410.32780.39760.52243.84810.824
SGI 0.60470.4990.73470.74171.23361.8291.50832.34642.65622.5945
DEPI 0.8490.90121.0471.11010.84130.89251.00881.3112.2712.2835
SGAI 1.84592.35461.70311.83121.16310.74350.85880.50220.43440.443
LVGI 1.02631.20021.11710.66740.6690.70780.76631.19161.3021.2714
TATA -0.0994-0.0579-0.2152-0.0565-0.00550.03180.1733-0.0027-0.1347-0.1994
M-score -7.125.13-17.92-6.53-3.47-2.615.288.740.46-2.22
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