Arlington Asset Investment (Arlington Asset Investment) Beneish M-Score : -2.62 (As of Jun. 10, 2024)

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What is Arlington Asset Investment Beneish M-Score?

Note: Financial institutions were excluded from the sample in Beneish paper when calculating Beneish M-Score. Thus, the prediction might not fit banks and insurance companies.

The zones of discrimination for M-Score is as such:

An M-Score of equal or less than -1.78 suggests that the company is unlikely to be a manipulator.
An M-Score of greater than -1.78 signals that the company is likely to be a manipulator.

Good Sign:

Beneish M-Score -2.62 no higher than -1.78, which implies that the company is unlikely to be a manipulator.

The historical rank and industry rank for Arlington Asset Investment's Beneish M-Score or its related term are showing as below:

AAICpC.PFD' s Beneish M-Score Range Over the Past 10 Years
Min: -4.95 Med: -1.95 Max: 5.79
Current: -2.62

During the past 13 years, the highest Beneish M-Score of Arlington Asset Investment was 5.79. The lowest was -4.95. And the median was -1.95.

Arlington Asset Investment Beneish M-Score Calculation

The M-score was created by Professor Messod Beneish. Instead of measuring the bankruptcy risk (Altman Z-Score) or business trend (Piotroski 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 Arlington Asset Investment for today is based on a combination of the following eight different indices:

-4.84

0.92 * DSRI

0.528 * GMI

0.404 * AQI

0.892 * SGI

0.115 * DEPI

-4.84

0.92 * 1.7753

0.528 * 1

0.404 * 1

0.892 * 0.6564

0.115 * 1

0.172 * SGAI

4.679 * TATA

0.327 * LVGI

0.172 * 1.852

4.679 * 0.01462

0.327 * 0.3304

-1.93

* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD.
* For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.

This Year (Sep23) TTM:

Last Year (Sep22) TTM:

Total Receivables was $191.80 Mil.
Revenue was -3.181 + 10.968 + 1.802 + 9.566 = $19.16 Mil.
Gross Profit was -3.181 + 10.968 + 1.802 + 9.566 = $19.16 Mil.
Total Current Assets was $0.00 Mil.
Total Assets was $867.26 Mil.
Property, Plant and Equipment(Net PPE) was $0.00 Mil.
Depreciation, Depletion and Amortization(DDA) was $0.00 Mil.
Selling, General, & Admin. Expense(SGA) was $16.32 Mil.
Total Current Liabilities was $0.00 Mil.
Long-Term Debt & Capital Lease Obligation was $86.80 Mil.
Net Income was -6.613 + 4.868 + -2.218 + 4.389 = $0.43 Mil.
Non Operating Income was 0 + 0 + 0 + 0 = $0.00 Mil.
Cash Flow from Operations was -2.208 + -6.615 + -4.416 + 0.986 = $-12.25 Mil.

Total Receivables was $164.59 Mil.
Revenue was 9.754 + 6.811 + 4.401 + 8.215 = $29.18 Mil.
Gross Profit was 9.754 + 6.811 + 4.401 + 8.215 = $29.18 Mil.
Total Current Assets was $0.00 Mil.
Total Assets was $1,074.14 Mil.
Property, Plant and Equipment(Net PPE) was $0.00 Mil.
Depreciation, Depletion and Amortization(DDA) was $0.00 Mil.
Selling, General, & Admin. Expense(SGA) was $13.43 Mil.
Total Current Liabilities was $0.00 Mil.
Long-Term Debt & Capital Lease Obligation was $325.44 Mil.

1. DSRI = Days Sales in Receivables Index

Measured as the ratio of Revenue in Total 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)
	=	(191.8 / 19.155)	/	(164.585 / 29.181)
	=	10.013051	/	5.640143
	=	1.7753

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)
	=	(29.181 / 29.181)	/	(19.155 / 19.155)
	=	1	/	1
	=	1

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 Property, Plant and Equipment to Total Assets.

AQI	=	(1 - (CurrentAssets_t + PPE_t) / TotalAssets_t)	/	(1 - (CurrentAssets_t-1 + PPE_t-1) / TotalAssets_t-1)
	=	(1 - (0 + 0) / 867.258)	/	(1 - (0 + 0) / 1074.141)
	=	1	/	1
	=	1

4. SGI = Sales Growth Index

Ratio of Revenue 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
	=	19.155	/	29.181
	=	0.6564

5. DEPI = Depreciation Index

Measured as the ratio of the rate of Depreciation, Depletion and Amortization 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))
	=	(0 / (0 + 0))	/	(0 / (0 + 0))
	=		/
	=	1

Note: If the Depreciation, Depletion and Amortization data is not available, we assume that the depreciation rate is constant and set the Depreciation Index to 1.

6. SGAI = Sales, General and Administrative expenses Index

The ratio of Selling, General, & Admin. Expense(SGA) to Sales 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)
	=	(16.324 / 19.155)	/	(13.428 / 29.181)
	=	0.852206	/	0.460162
	=	1.852

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 in leverage

LVGI	=	((LTD_t + CurrentLiabilities_t) / TotalAssets_t)	/	((LTD_t-1 + CurrentLiabilities_t-1) / TotalAssets_t-1)
	=	((86.804 + 0) / 867.258)	/	((325.439 + 0) / 1074.141)
	=	0.10009	/	0.302976
	=	0.3304

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
	=	(0.426 - 0	-	-12.253)	/	867.258
	=	0.01462

An M-Score of equal or less than -1.78 suggests that the company is unlikely to be a manipulator. An M-Score of greater than -1.78 signals that the company is likely to be a manipulator.

Arlington Asset Investment has a M-score of -1.93 suggests that the company is unlikely to be a manipulator.

Arlington Asset Investment Beneish M-Score Related Terms

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Arlington Asset Investment (Arlington Asset Investment) Business Description

Industry

GURUFOCUS.COM » STOCK LIST » Real Estate » REITs » Arlington Asset Investment Corp (NYSE:AAICpC.PFD) » Definitions » Beneish M-Score

Comparable Companies

AJX LFT CHMI MITT SEVN EARN SACH ACR WMC LOAN NLY STWD AGNC RITM BXMT ABR RC CMTG ARI LADR

Traded in Other Exchanges

N/A

Address

6862 Elm Street, Suite 320, McLean, VA, USA, 22101

Website

https://www.arlingtonasset.com

Arlington Asset Investment Corp is a U.S. based principal investment company. The company holds a leveraged MBS investment portfolio, including Agency MBS, private-label MBS, private-label interest-only MBS, and net long TBA positions, with Agency MBS accounting for the majority of total investment capital. Agency MBS consists of residential mortgage pass-through certificates, for which the U.S. government agency and government-sponsored enterprise guarantee the principal and interest payments. The company generates the majority of its total interest income from Agency MBS. The company focuses its business in the United States.