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Beneish M-Score 5.24 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 -2.67.
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 * 8.8047||+||0.528 * -0.0267||+||0.404 * 0.3976||+||0.892 * 1.5083||+||0.115 * 1.0088|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.8588||+||4.679 * 0.1651||-||0.327 * 0.7663|
|This Year (Dec15) TTM:||Last Year (Dec14) TTM:|
|Accounts Receivable was $64.78 Mil.|
Revenue was 35.43 + 16.197 + 12.32 + 6.601 = $70.55 Mil.
Gross Profit was 29.767 + 9.985 + 5.343 + -5.539 = $39.56 Mil.
Total Current Assets was $191.88 Mil.
Total Assets was $199.92 Mil.
Property, Plant and Equipment(Net PPE) was $5.69 Mil.
Depreciation, Depletion and Amortization(DDA) was $2.76 Mil.
Selling, General & Admin. Expense(SGA) was $33.85 Mil.
Total Current Liabilities was $53.02 Mil.
Long-Term Debt was $110.39 Mil.
Net Income was -24.164 + -20.987 + -12.734 + 58.307 = $0.42 Mil.
Non Operating Income was 0 + 0 + 11.494 + 6.402 = $17.90 Mil.
Cash Flow from Operations was -42.257 + -19.204 + -27.265 + 38.255 = $-50.47 Mil.
|Accounts Receivable was $4.88 Mil.
Revenue was 26.919 + 6.069 + 6.011 + 7.773 = $46.77 Mil.
Gross Profit was 13.821 + -6.108 + -5.43 + -2.983 = $-0.70 Mil.
Total Current Assets was $150.75 Mil.
Total Assets was $163.65 Mil.
Property, Plant and Equipment(Net PPE) was $8.07 Mil.
Depreciation, Depletion and Amortization(DDA) was $3.96 Mil.
Selling, General & Admin. Expense(SGA) was $26.13 Mil.
Total Current Liabilities was $67.94 Mil.
Long-Term Debt was $106.61 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)|
|=||(64.782 / 70.548)||/||(4.878 / 46.772)|
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)|
|=||(9.985 / 46.772)||/||(29.767 / 70.548)|
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 - (191.882 + 5.694) / 199.918)||/||(1 - (150.754 + 8.072) / 163.648)|
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))|
|=||(3.958 / (3.958 + 8.072))||/||(2.756 / (2.756 + 5.694))|
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)|
|=||(33.852 / 70.548)||/||(26.133 / 46.772)|
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)|
|=||((110.386 + 53.02) / 199.918)||/||((106.607 + 67.939) / 163.648)|
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|
|=||(0.422 - 17.896||-||-50.471)||/||199.918|
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 5.24 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