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Beneish M-Score 8.7 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 10000000.00. The lowest was -10000000.00. 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 * 12.6732||+||0.528 * -0.0928||+||0.404 * 0.5224||+||0.892 * 2.3464||+||0.115 * 1.311|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.5022||+||4.679 * -0.011||-||0.327 * 1.1916|
|This Year (Mar16) TTM:||Last Year (Mar15) TTM:|
|Accounts Receivable was $62.9 Mil.|
Revenue was 43.047 + 35.43 + 16.197 + 12.32 = $107.0 Mil.
Gross Profit was 37.2 + 29.767 + 9.985 + 5.343 = $82.3 Mil.
Total Current Assets was $187.5 Mil.
Total Assets was $196.2 Mil.
Property, Plant and Equipment(Net PPE) was $6.5 Mil.
Depreciation, Depletion and Amortization(DDA) was $2.2 Mil.
Selling, General & Admin. Expense(SGA) was $34.1 Mil.
Total Current Liabilities was $59.5 Mil.
Long-Term Debt was $112.0 Mil.
Net Income was -22.675 + -24.164 + -20.987 + -12.734 = $-80.6 Mil.
Non Operating Income was 0 + 0 + 0 + 11.494 = $11.5 Mil.
Cash Flow from Operations was -1.167 + -42.257 + -19.204 + -27.265 = $-89.9 Mil.
|Accounts Receivable was $2.1 Mil.
Revenue was 6.601 + 26.919 + 6.069 + 6.011 = $45.6 Mil.
Gross Profit was -5.539 + 13.821 + -6.108 + -5.43 = $-3.3 Mil.
Total Current Assets was $196.6 Mil.
Total Assets was $208.4 Mil.
Property, Plant and Equipment(Net PPE) was $7.5 Mil.
Depreciation, Depletion and Amortization(DDA) was $3.7 Mil.
Selling, General & Admin. Expense(SGA) was $28.9 Mil.
Total Current Liabilities was $44.9 Mil.
Long-Term Debt was $108.0 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)|
|=||(62.921 / 106.994)||/||(2.116 / 45.6)|
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)|
|=||(29.767 / 45.6)||/||(37.2 / 106.994)|
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 - (187.525 + 6.498) / 196.184)||/||(1 - (196.595 + 7.455) / 208.445)|
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))|
|=||(3.706 / (3.706 + 7.455))||/||(2.204 / (2.204 + 6.498))|
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)|
|=||(34.071 / 106.994)||/||(28.915 / 45.6)|
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)|
|=||((111.999 + 59.48) / 196.184)||/||((107.985 + 44.917) / 208.445)|
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|
|=||(-80.56 - 11.494||-||-89.893)||/||196.184|
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 8.70 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