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

Warning Sign:

Beneish M-Score 5.13 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 5.13 signals that the company is a manipulator.

ARRY' s 10-Year Beneish M-Score Range
Min: -7.32   Max: 349.55
Current: 5.13

-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 -2.62.


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 * 11.8582+0.528 * -1.2425+0.404 * 0.5778+0.892 * 0.499+0.115 * 0.9012
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 2.3546+4.679 * -0.0579-0.327 * 1.2002
=5.13

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

This Year (Sep14) TTM:Last Year (Sep13) TTM:
Accounts Receivable was $6.00 Mil.
Revenue was 6.069 + 6.011 + 7.773 + 14.066 = $33.92 Mil.
Gross Profit was -6.108 + -5.43 + -2.983 + 0.956 = $-13.57 Mil.
Total Current Assets was $122.79 Mil.
Total Assets was $135.33 Mil.
Property, Plant and Equipment(Net PPE) was $7.76 Mil.
Depreciation, Depletion and Amortization(DDA) was $4.28 Mil.
Selling, General & Admin. Expense(SGA) was $23.53 Mil.
Total Current Liabilities was $56.57 Mil.
Long-Term Debt was $105.26 Mil.
Net Income was -27.593 + -28.237 + -24.932 + -16.408 = $-97.17 Mil.
Non Operating Income was 0 + 0 + 0 + 0 = $0.00 Mil.
Cash Flow from Operations was -18.769 + -22.238 + -15.129 + -33.203 = $-89.34 Mil.
Accounts Receivable was $1.01 Mil.
Revenue was 14.228 + 25.415 + 9.955 + 18.377 = $67.98 Mil.
Gross Profit was 3.57 + 18.409 + 1.331 + 10.468 = $33.78 Mil.
Total Current Assets was $134.18 Mil.
Total Assets was $152.65 Mil.
Property, Plant and Equipment(Net PPE) was $9.14 Mil.
Depreciation, Depletion and Amortization(DDA) was $4.31 Mil.
Selling, General & Admin. Expense(SGA) was $20.02 Mil.
Total Current Liabilities was $51.89 Mil.
Long-Term Debt was $100.20 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)
=(6 / 33.919) / (1.014 / 67.975)
=0.17689201 / 0.01491725
=11.8582

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)
=(-5.43 / 67.975) / (-6.108 / 33.919)
=0.49691798 / -0.39992335
=-1.2425

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 - (122.787 + 7.764) / 135.328) / (1 - (134.176 + 9.144) / 152.645)
=0.03529942 / 0.06108946
=0.5778

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
=33.919 / 67.975
=0.499

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))
=(4.307 / (4.307 + 9.144)) / (4.279 / (4.279 + 7.764))
=0.32019924 / 0.35531014
=0.9012

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)
=(23.527 / 33.919) / (20.024 / 67.975)
=0.69362304 / 0.29457889
=2.3546

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)
=((105.263 + 56.569) / 135.328) / ((100.203 + 51.886) / 152.645)
=1.19585008 / 0.99635756
=1.2002

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
=(-97.17 - 0 - -89.339) / 135.328
=-0.0579

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 5.13 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

Jun05Jun06Jun07Jun08Jun09Jun10Jun11Jun12Jun13Jun14
DSRI 0.48192.0209240.9641011110.92090.9356
GMI -0.4251.36771.25971.25910.43270.79340.83611.2595-6.1458
AQI 0.0369023.0071.26090.5170.2710.7721.26581.9475
SGI 1.30650.98890.77920.86722.15681.33451.18410.81730.6047
DEPI 0.93720.82110.97750.94830.87450.69911.10270.98060.849
SGAI 0.89491.48771.46651.33280.44050.71170.78961.57951.846
LVGI 0.88381.58181.89172.91330.96161.50510.86210.70751.0243
TATA -0.0474-0.1499-0.2985-0.1803-0.60620.15760.10090.2671-0.0976
M-score -4.00-2.76225.35-4.81-4.68-2.00-1.937.97-6.91

Array BioPharma Inc Quarterly Data

Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14
DSRI 111110.92111110.935611.8582
GMI 0.83610.9091.03631.26571.25951.39071.70171.6873-6.1458-1.2425
AQI 0.7721.14630.55880.95091.26581.82612.9032.88641.94750.5778
SGI 1.18411.04390.89960.77620.81730.86220.86050.94840.60470.499
DEPI 1.10271.13861.15911.18920.98060.91930.85880.80970.8490.9012
SGAI 0.78960.99141.21871.61811.57961.42811.42031.191.84592.3546
LVGI 0.86211.02890.54461.00260.70750.53260.8470.78981.02431.2002
TATA 0.1010.440.31320.2940.26710.07960.07160.0004-0.0976-0.0579
M-score -1.93-0.36-1.13-1.277.97-1.62-1.17-1.38-6.915.13
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