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GuruFocus has detected 4 Warning Signs with Array BioPharma Inc $ARRY.
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Array BioPharma Inc (NAS:ARRY)
Beneish M-Score
-2.90 (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 -2.90 suggests that the company is not a manipulator.

ARRY' s Beneish M-Score Range Over the Past 10 Years
Min: -10000000   Max: 10000000
Current: -2.9

-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 -2.62.


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 * 0.2762+0.528 * 0.6768+0.404 * 0.2731+0.892 * 2.4104+0.115 * 1.8053
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.4371+4.679 * -0.1707-0.327 * 0.8177
=-2.90

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

This Year (Dec16) TTM:Last Year (Dec15) TTM:
Accounts Receivable was $43.1 Mil.
Revenue was 44.523 + 39.271 + 43.205 + 43.047 = $170.0 Mil.
Gross Profit was 35.497 + 30.426 + 37.761 + 37.2 = $140.9 Mil.
Total Current Assets was $263.9 Mil.
Total Assets was $272.2 Mil.
Property, Plant and Equipment(Net PPE) was $7.4 Mil.
Depreciation, Depletion and Amortization(DDA) was $1.6 Mil.
Selling, General & Admin. Expense(SGA) was $35.7 Mil.
Total Current Liabilities was $64.4 Mil.
Long-Term Debt was $117.5 Mil.
Net Income was -23.301 + -28.608 + -25.014 + -22.675 = $-99.6 Mil.
Non Operating Income was -0.6 + -1.7 + 0 + 0 = $-2.3 Mil.
Cash Flow from Operations was -27.605 + -14.605 + -7.462 + -1.167 = $-50.8 Mil.
Accounts Receivable was $64.8 Mil.
Revenue was 35.43 + 16.197 + 12.32 + 6.601 = $70.5 Mil.
Gross Profit was 29.767 + 9.985 + 5.343 + -5.539 = $39.6 Mil.
Total Current Assets was $191.9 Mil.
Total Assets was $199.9 Mil.
Property, Plant and Equipment(Net PPE) was $5.7 Mil.
Depreciation, Depletion and Amortization(DDA) was $2.8 Mil.
Selling, General & Admin. Expense(SGA) was $33.9 Mil.
Total Current Liabilities was $53.0 Mil.
Long-Term Debt was $110.4 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)
=(43.122 / 170.046) / (64.782 / 70.548)
=0.25359021 / 0.91826841
=0.2762

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)
=(39.556 / 70.548) / (140.884 / 170.046)
=0.56069626 / 0.82850523
=0.6768

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 - (263.889 + 7.442) / 272.202) / (1 - (191.882 + 5.694) / 199.918)
=0.00319983 / 0.0117148
=0.2731

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
=170.046 / 70.548
=2.4104

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))
=(2.756 / (2.756 + 5.694)) / (1.641 / (1.641 + 7.442))
=0.32615385 / 0.18066718
=1.8053

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)
=(35.667 / 170.046) / (33.852 / 70.548)
=0.20974913 / 0.47984351
=0.4371

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)
=((117.544 + 64.385) / 272.202) / ((110.386 + 53.02) / 199.918)
=0.66836026 / 0.81736512
=0.8177

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
=(-99.598 - -2.3 - -50.839) / 272.202
=-0.1707

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 -2.90 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

Sep14Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16Dec16
DSRI 11.85821.16280.64360.94171.23068.804712.67322.3460.96870.2762
GMI -1.2425-25.4678-4.5448-0.6379-1.0508-0.0267-0.09280.17410.45320.6768
AQI 0.57780.45740.30810.21410.32780.39760.52243.84810.8240.2731
SGI 0.4990.73470.74171.23361.8291.50832.34642.65622.59452.4104
DEPI 0.90121.0471.11010.84130.89251.00881.3112.2712.28351.8053
SGAI 2.35461.70311.83121.16310.74350.85880.50220.43440.4430.4371
LVGI 1.20021.11710.66740.6690.70780.76631.19161.3021.27140.8177
TATA -0.0579-0.2152-0.0565-0.00550.03180.1733-0.0027-0.1347-0.1994-0.1707
M-score 5.13-17.92-6.53-3.47-2.615.288.740.46-2.22-2.90
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