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Beneish M-Score -1.17 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 -1.17 signals that the company is 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 -2.65.
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 * 1||+||0.528 * 1.7017||+||0.404 * 2.903||+||0.892 * 0.8605||+||0.115 * 0.8588|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.4203||+||4.679 * 0.0716||-||0.327 * 0.847|
|This Year (Dec13) TTM:||Last Year (Dec12) TTM:|
|Accounts Receivable was $5.71 Mil.|
Revenue was 14.066 + 14.228 + 25.415 + 9.955 = $63.66 Mil.
Gross Profit was 0.956 + 3.57 + 18.409 + 1.331 = $24.27 Mil.
Total Current Assets was $128.47 Mil.
Total Assets was $146.32 Mil.
Property, Plant and Equipment(Net PPE) was $8.42 Mil.
Depreciation, Depletion and Amortization(DDA) was $4.43 Mil.
Selling, General & Admin. Expense(SGA) was $20.89 Mil.
Total Current Liabilities was $38.28 Mil.
Long-Term Debt was $101.43 Mil.
Net Income was -16.408 + -15.68 + -17.651 + -21.594 = $-71.33 Mil.
Non Operating Income was 0 + 0 + -11.197 + 0 = $-11.20 Mil.
Cash Flow from Operations was -33.203 + -1.112 + -14.083 + -22.221 = $-70.62 Mil.
|Accounts Receivable was $0.00 Mil.
Revenue was 18.377 + 15.833 + 20.664 + 19.113 = $73.99 Mil.
Gross Profit was 10.468 + 9.294 + 14.405 + 13.822 = $47.99 Mil.
Total Current Assets was $114.28 Mil.
Total Assets was $128.37 Mil.
Property, Plant and Equipment(Net PPE) was $11.25 Mil.
Depreciation, Depletion and Amortization(DDA) was $4.72 Mil.
Selling, General & Admin. Expense(SGA) was $17.09 Mil.
Total Current Liabilities was $50.30 Mil.
Long-Term Debt was $94.42 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)|
|=||(5.71 / 63.664)||/||(0 / 73.987)|
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)|
|=||(3.57 / 73.987)||/||(0.956 / 63.664)|
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 - (128.473 + 8.421) / 146.321)||/||(1 - (114.279 + 11.245) / 128.373)|
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))|
|=||(4.724 / (4.724 + 11.245))||/||(4.425 / (4.425 + 8.421))|
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)|
|=||(20.886 / 63.664)||/||(17.09 / 73.987)|
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)|
|=||((101.43 + 38.278) / 146.321)||/||((94.417 + 50.3) / 128.373)|
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|
|=||(-71.333 - -11.197||-||-70.619)||/||146.321|
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 -1.17 signals that the company is likely to 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