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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 Dana Inc was 3.69. The lowest was -4.06. And the median was -2.65.
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 Dana 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 * 1.1271||+||0.528 * 1.0176||+||0.404 * 0.8831||+||0.892 * 0.9181||+||0.115 * 1.1342|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0755||+||4.679 * -0.0455||-||0.327 * 1.0351|
|This Year (Sep16) TTM:||Last Year (Sep15) TTM:|
|Accounts Receivable was $802 Mil.|
Revenue was 1384 + 1546 + 1449 + 1375 = $5,754 Mil.
Gross Profit was 208 + 233 + 199 + 172 = $812 Mil.
Total Current Assets was $2,641 Mil.
Total Assets was $4,613 Mil.
Property, Plant and Equipment(Net PPE) was $1,283 Mil.
Depreciation, Depletion and Amortization(DDA) was $179 Mil.
Selling, General & Admin. Expense(SGA) was $395 Mil.
Total Current Liabilities was $1,252 Mil.
Long-Term Debt was $1,615 Mil.
Net Income was 57 + 53 + 45 + -82 = $73 Mil.
Non Operating Income was -11 + -17 + -3 + -8 = $-39 Mil.
Cash Flow from Operations was 24 + 185 + -27 + 140 = $322 Mil.
|Accounts Receivable was $775 Mil.
Revenue was 1468 + 1609 + 1608 + 1582 = $6,267 Mil.
Gross Profit was 213 + 236 + 228 + 223 = $900 Mil.
Total Current Assets was $2,681 Mil.
Total Assets was $4,600 Mil.
Property, Plant and Equipment(Net PPE) was $1,141 Mil.
Depreciation, Depletion and Amortization(DDA) was $184 Mil.
Selling, General & Admin. Expense(SGA) was $400 Mil.
Total Current Liabilities was $1,196 Mil.
Long-Term Debt was $1,566 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)|
|=||(802 / 5754)||/||(775 / 6267)|
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)|
|=||(900 / 6267)||/||(812 / 5754)|
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 - (2641 + 1283) / 4613)||/||(1 - (2681 + 1141) / 4600)|
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))|
|=||(184 / (184 + 1141))||/||(179 / (179 + 1283))|
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)|
|=||(395 / 5754)||/||(400 / 6267)|
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)|
|=||((1615 + 1252) / 4613)||/||((1566 + 1196) / 4600)|
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|
|=||(73 - -39||-||322)||/||4613|
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.
Dana Inc has a M-score of -2.70 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
Dana Inc Annual Data
Dana Inc Quarterly Data