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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.
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 * 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|
|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
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)|
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)|
|=||(-5.43 / 67.975)||/||(-6.108 / 33.919)|
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 - (122.787 + 7.764) / 135.328)||/||(1 - (134.176 + 9.144) / 152.645)|
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))|
|=||(4.307 / (4.307 + 9.144))||/||(4.279 / (4.279 + 7.764))|
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)|
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)|
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|
|=||(-97.17 - 0||-||-89.339)||/||135.328|
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.
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