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Array BioPharma, Inc. (NAS:ARRY)
Beneish M-Score
-1.17 (As of Today)

Warning Sign:

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.

ARRY' s 10-Year Beneish M-Score Range
Min: -7.32   Max: 349.55
Current: -1.17

-7.32
349.55

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.


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 * 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
=-1.17

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

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

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)
=(5.71 / 63.664) / (0 / 73.987)
=0.08968962 / 0
=1

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)
=(3.57 / 73.987) / (0.956 / 63.664)
=0.64861395 / 0.38115733
=1.7017

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 - (128.473 + 8.421) / 146.321) / (1 - (114.279 + 11.245) / 128.373)
=0.06442684 / 0.02219314
=2.903

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
=63.664 / 73.987
=0.8605

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))
=0.29582316 / 0.3444652
=0.8588

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)
=0.3280661 / 0.23098652
=1.4203

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)
=0.95480485 / 1.12731649
=0.847

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
=(-71.333 - -11.197 - -70.619) / 146.321
=0.0716

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.


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

Jun04Jun05Jun06Jun07Jun08Jun09Jun10Jun11Jun12Jun13
DSRI 0.66250.48192.0209240.9641011110.9209
GMI 0.0045-0.4251.36771.25971.25910.43270.79340.83611.2595
AQI 17.96230.0369023.0071.26090.5170.2710.7721.2658
SGI 0.99161.30650.98890.77920.86722.15681.33451.18410.8173
DEPI 0.82720.93720.82110.97750.94830.87450.69911.10270.9806
SGAI 0.90810.89491.48771.46651.33280.44050.71170.78961.5795
LVGI 3.16650.88381.58181.89172.91330.96161.50510.86210.7075
TATA -0.4046-0.0474-0.1499-0.2985-0.1803-0.60620.15760.10090.2671
M-score 0.92-4.00-2.76225.35-4.81-4.68-2.00-1.937.97

Array BioPharma, Inc. Quarterly Data

Sep11Dec11Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13
DSRI 111111110.921111
GMI 0.85940.82420.82160.83610.9091.03631.26571.25951.39071.7017
AQI 0.21740.38560.88360.7721.14630.55880.95091.26581.82612.903
SGI 1.17081.15261.17921.18411.04390.89960.77620.81730.86220.8605
DEPI 0.69350.68350.68211.10271.13861.15911.18920.98060.91930.8588
SGAI 0.78140.81380.78860.78960.99141.21871.61811.57961.42811.4203
LVGI 1.32091.42880.82650.86211.02890.54461.00260.70750.53260.847
TATA -0.1340.04570.03660.1010.440.31320.2940.26710.07960.0716
M-score -3.45-2.62-2.23-1.93-0.36-1.13-1.277.97-1.62-1.17
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