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GuruFocus has detected 3 Warning Signs with Ark Restaurants Corp $ARKR.
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Ark Restaurants Corp (NAS:ARKR)
Beneish M-Score
-2.57 (As of Today)

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.

Ark Restaurants Corp has a M-score of -2.57 suggests that the company is not a manipulator.

ARKR' s Beneish M-Score Range Over the Past 10 Years
Min: -10.1   Max: 23.75
Current: -2.57

-10.1
23.75

During the past 13 years, the highest Beneish M-Score of Ark Restaurants Corp was 23.75. The lowest was -10.10. And the median was -2.85.


Definition

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 Ark Restaurants Corp 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 * 1.1996+0.528 * 0.9964+0.404 * 1.0347+0.892 * 1.0028+0.115 * 1.2107
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9901+4.679 * -0.06-0.327 * 1.0902
=-2.57

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

This Year (Mar17) TTM:Last Year (Mar16) TTM:
Accounts Receivable was $3.9 Mil.
Revenue was 34.478 + 38.392 + 38.538 + 41.233 = $152.6 Mil.
Gross Profit was 3.082 + 6.088 + 5.957 + 9.374 = $24.5 Mil.
Total Current Assets was $10.5 Mil.
Total Assets was $74.2 Mil.
Property, Plant and Equipment(Net PPE) was $37.8 Mil.
Depreciation, Depletion and Amortization(DDA) was $4.5 Mil.
Selling, General & Admin. Expense(SGA) was $11.4 Mil.
Total Current Liabilities was $19.1 Mil.
Long-Term Debt was $10.0 Mil.
Net Income was -0.393 + 1.734 + 0.987 + 3.367 = $5.7 Mil.
Non Operating Income was 0.162 + 0.028 + -0.009 + 0.217 = $0.4 Mil.
Cash Flow from Operations was 1.356 + 1.824 + 1.314 + 5.256 = $9.8 Mil.
Accounts Receivable was $3.3 Mil.
Revenue was 34.272 + 36.991 + 40.581 + 40.375 = $152.2 Mil.
Gross Profit was 3.225 + 5.099 + 7.448 + 8.574 = $24.3 Mil.
Total Current Assets was $14.2 Mil.
Total Assets was $66.9 Mil.
Property, Plant and Equipment(Net PPE) was $30.2 Mil.
Depreciation, Depletion and Amortization(DDA) was $4.5 Mil.
Selling, General & Admin. Expense(SGA) was $11.5 Mil.
Total Current Liabilities was $17.5 Mil.
Long-Term Debt was $6.6 Mil.



1. DSRI = Days Sales in Receivables Index

Measured as the ratio of days’ sales in 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)
=(3.918 / 152.641) / (3.257 / 152.219)
=0.02566807 / 0.0213968
=1.1996

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)
=(24.346 / 152.219) / (24.501 / 152.641)
=0.15994061 / 0.16051389
=0.9964

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 plant, property and equipment to total assets.

AQI=(1 - (CurrentAssets_t + PPE_t) / TotalAssets_t) / (1 - (CurrentAssets_t-1 + PPE_t-1) / TotalAssets_t-1)
=(1 - (10.453 + 37.825) / 74.172) / (1 - (14.191 + 30.165) / 66.943)
=0.34910748 / 0.33740645
=1.0347

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.

SGI=Sales_t / Sales_t-1
=Revenue_t / Revenue_t-1
=152.641 / 152.219
=1.0028

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))
=(4.487 / (4.487 + 30.165)) / (4.53 / (4.53 + 37.825))
=0.12948748 / 0.10695313
=1.2107

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)
=(11.412 / 152.641) / (11.494 / 152.219)
=0.07476366 / 0.07550963
=0.9901

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)
=((10.02 + 19.07) / 74.172) / ((6.617 + 17.465) / 66.943)
=0.39219652 / 0.35973888
=1.0902

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
=(5.695 - 0.398 - 9.75) / 74.172
=-0.06

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.

Ark Restaurants Corp has a M-score of -2.57 suggests that the company will not be a manipulator.


Related Terms

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


Historical Data

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

Ark Restaurants Corp Annual Data

Sep07Sep08Sep09Sep10Sep11Sep12Sep13Sep14Sep15Sep16
DSRI 1.01850.97620.77960.98471.53581.02810.75631.04221.02031.1244
GMI 0.89272.61522.14850.98251.01346.79140.08371.48630.97791.0611
AQI 0.96680.92361.03041.13661.12190.85391.27621.11370.98581.0548
SGI 1.00841.10340.91031.0241.16931.00230.94621.06711.04671.0355
DEPI 1.13221.08070.87680.91130.85451.19410.92411.06881.00211.0263
SGAI 1.09680.28570.40191.05180.8515-1.2307-1.86610.47240.99971.0388
LVGI 1.13390.68231.33511.14930.84711.06881.17471.16460.95050.995
TATA 0.0086-0.0936-0.0941-0.0644-0.1401-0.1521-0.1726-0.1144-0.0924-0.0586
M-score -2.53-1.79-2.61-2.80-2.380.22-3.50-2.57-2.85-2.56

Ark Restaurants Corp Quarterly Data

Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16Dec16Mar17
DSRI 0.99090.96241.77891.02031.7651.1030.83951.12440.89161.1996
GMI 1.03491.06890.95460.97791.00840.97671.00681.06110.99370.9964
AQI 1.04631.07350.97320.98581.00561.00391.01161.05481.01371.0347
SGI 1.06981.05811.04681.04671.06341.07891.07531.03551.01971.0028
DEPI 1.07340.94780.96341.00211.09541.0781.06141.02631.14621.2107
SGAI 0.9641.01811.03090.99970.99921.00411.00471.03881.02160.9901
LVGI 1.17750.89150.91330.95051.08441.1021.09570.9951.08671.0902
TATA -0.1104-0.0923-0.0828-0.0924-0.0561-0.0935-0.0936-0.0586-0.0711-0.06
M-score -2.95-2.80-2.13-2.85-1.99-2.79-3.02-2.56-2.91-2.57
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