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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 -2.68.
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 * 1.2306||+||0.528 * -1.0508||+||0.404 * 0.3278||+||0.892 * 1.829||+||0.115 * 0.8925|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.7435||+||4.679 * 0.0231||-||0.327 * 0.7078|
|This Year (Sep15) TTM:||Last Year (Sep14) TTM:|
|Accounts Receivable was $13.50 Mil.|
Revenue was 16.197 + 12.32 + 6.601 + 26.919 = $62.04 Mil.
Gross Profit was 9.985 + 5.343 + -5.539 + 13.821 = $23.61 Mil.
Total Current Assets was $179.60 Mil.
Total Assets was $186.75 Mil.
Property, Plant and Equipment(Net PPE) was $4.99 Mil.
Depreciation, Depletion and Amortization(DDA) was $3.30 Mil.
Selling, General & Admin. Expense(SGA) was $31.99 Mil.
Total Current Liabilities was $49.26 Mil.
Long-Term Debt was $108.81 Mil.
Net Income was -20.987 + -12.734 + 58.307 + -8.611 = $15.98 Mil.
Non Operating Income was 0 + 11.494 + 6.402 + 0 = $17.90 Mil.
Cash Flow from Operations was -19.204 + -27.265 + 38.255 + 1.986 = $-6.23 Mil.
|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.
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)|
|=||(13.504 / 62.037)||/||(6 / 33.919)|
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)|
|=||(5.343 / 33.919)||/||(9.985 / 62.037)|
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 - (179.603 + 4.988) / 186.752)||/||(1 - (122.787 + 7.764) / 135.328)|
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))|
|=||(4.279 / (4.279 + 7.764))||/||(3.299 / (3.299 + 4.988))|
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)|
|=||(31.992 / 62.037)||/||(23.527 / 33.919)|
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)|
|=||((108.813 + 49.261) / 186.752)||/||((105.263 + 56.569) / 135.328)|
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|
|=||(15.975 - 17.896||-||-6.228)||/||186.752|
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 -2.65 suggests that the company will not 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