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Apollo Residential Mortgage (NYSE:AMTGPRA.PFD) Beneish M-Score

: -4.40 (As of Today)
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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.

The historical rank and industry rank for Apollo Residential Mortgage's Beneish M-Score or its related term are showing as below:

AMTGPRA.PFD' s Beneish M-Score Range Over the Past 10 Years
Min: -4.4   Med: -1.56   Max: 1.28
Current: -4.4

During the past 5 years, the highest Beneish M-Score of Apollo Residential Mortgage was 1.28. The lowest was -4.40. And the median was -1.56.


Apollo Residential Mortgage 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 Apollo Residential Mortgage 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 * 0.3865+0.528 * 1+0.404 * 1.0245+0.892 * 0.2496+0.115 * 1
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 4.9841+4.679 * -0.02-0.327 * 0.3246
=-4.26

* 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 (Jun16) TTM:Last Year (Jun15) TTM:
Total Receivables was $14.14 Mil.
Revenue was 27.776 + -3.06 + 5.731 + -15.405 = $15.04 Mil.
Gross Profit was 27.776 + -3.06 + 5.731 + -15.405 = $15.04 Mil.
Total Current Assets was $118.30 Mil.
Total Assets was $2,988.68 Mil.
Property, Plant and Equipment(Net PPE) was $0.00 Mil.
Depreciation, Depletion and Amortization(DDA) was $0.78 Mil.
Selling, General, & Admin. Expense(SGA) was $30.75 Mil.
Total Current Liabilities was $32.08 Mil.
Long-Term Debt & Capital Lease Obligation was $13.41 Mil.
Net Income was 20.298 + -13.034 + -1.194 + -21.777 = $-15.71 Mil.
Non Operating Income was 0 + 0 + 0 + 0 = $0.00 Mil.
Cash Flow from Operations was 12.368 + 6.183 + 13.424 + 11.997 = $43.97 Mil.
Total Receivables was $146.52 Mil.
Revenue was -3.482 + 28.045 + 19.098 + 16.6 = $60.26 Mil.
Gross Profit was -3.482 + 28.045 + 19.098 + 16.6 = $60.26 Mil.
Total Current Assets was $259.87 Mil.
Total Assets was $4,152.58 Mil.
Property, Plant and Equipment(Net PPE) was $0.00 Mil.
Depreciation, Depletion and Amortization(DDA) was $0.18 Mil.
Selling, General, & Admin. Expense(SGA) was $24.72 Mil.
Total Current Liabilities was $168.78 Mil.
Long-Term Debt & Capital Lease Obligation was $25.89 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)
=(14.136 / 15.042) / (146.517 / 60.261)
=0.93976865 / 2.43137353
=0.3865

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)
=(60.261 / 60.261) / (15.042 / 15.042)
=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 - (118.304 + 0) / 2988.678) / (1 - (259.867 + 0) / 4152.582)
=0.96041594 / 0.93742038
=1.0245

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
=15.042 / 60.261
=0.2496

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))
=(0.179 / (0.179 + 0)) / (0.782 / (0.782 + 0))
=1 / 1
=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)
=(30.749 / 15.042) / (24.716 / 60.261)
=2.04420955 / 0.41014918
=4.9841

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)
=((13.407 + 32.078) / 2988.678) / ((25.893 + 168.783) / 4152.582)
=0.0152191 / 0.04688071
=0.3246

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
=(-15.707 - 0 - 43.972) / 2988.678
=-0.02

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.

Apollo Residential Mortgage has a M-score of -4.26 suggests that the company is unlikely to be a manipulator.


Apollo Residential Mortgage Beneish M-Score Related Terms

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Apollo Residential Mortgage (NYSE:AMTGPRA.PFD) Business Description

Apollo Residential Mortgage logo
Traded in Other Exchanges
N/A
Address
Apollo Residential Mortgage Inc was incorporated in Maryland on March 15, 2011 and began operations on July 27, 2011, coinciding with the initial public offering of its common stock. The Company is a real estate investment trust mainly engaged in investing and managing residential mortgage-backed securities, residential mortgage loans and other residential mortgage assets in the United State. It is structured as a holding company and conducts its business mainly through ARM Operating, LLC and its other operating subsidiaries. The Company is an alternative investment manager. It currently operates as one business segment. The Company competes with other REITs, specialty finance companies, savings and loan associations, banks, mortgage bankers, insurance companies, mutual funds, institutional investors, investment banking firms, financial institutions, governmental bodies and other entities.
Executives
Hunt Gregory W. officer: CFO, Treasurer and Secretary 730 5TH AVENUE NEW YORK NY 10019
Galowski James director C/O APOLLO GLOBAL MANAGEMENT, LLC 9 WEST 57TH STREET, 43RD FLOOR NEW YORK NY 10019
Covello Teresa D officer: CFO, Treasurer and Secretary C/O MFA MORTGAGE INVESTMENTS, INC. 350 PARK AVENUE, 21ST FLOOR NEW YORK NY 10022
Commaroto Michael A officer: CEO and President C/O APOLLO GLOBAL MANAGEMENT, LLC 9 WEST 57TH STREET NEW YORK NY 10019
Rothstein Stuart officer: CFO,Treasurer & Secretary 2180 SAND HILL RD STE 200 MENLO PARK CA 94025
Christopoul Thomas director RESOURCES CONNECTION INC 17101 ARMSTRONG AVENUE IRVINE CA 92614
Taitz Hope S director C/O ATHENE HOLDING LTD. WASHINGTON HOUSE, 16 CHURCH STREET HAMILTON D0 HM 11
Kleisner Fred J director C/O MORGANS HOTEL GROUP CO. 475 TENTH AVENUE NEW YORK NY 10018
Khedouri Frederick N director C/O APOLLO GLOBAL MANAGEMENT, LLC 9 WEST 57TH STREET, 43RD FLOOR NEW YORK NY 10019
Biderman Mark C director NATIONAL FINANCIAL PARTNERS CORP 340 MADISON AVENUE, 19TH FL NEW YORK NY 10173
Becker Marc director C/O APOLLO MANAGEMENT LP 1301 AVENUE OF THE AMEICAS 38TH FL NEW YORK NY 10019
Stevens Justin director C/O APOLLO GLOBAL MANAGEMENT, LLC 9 WEST 57TH STREET, 43RD FLOOR NEW YORK NY 10019
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