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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 Holding Corp was -1.49. The lowest was -3.34. And the median was -2.71.
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 Holding 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 * 0.974||+||0.528 * 0.9517||+||0.404 * 1.1262||+||0.892 * 0.9775||+||0.115 * 1.149|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0255||+||4.679 * -0.0172||-||0.327 * 1.0547|
|This Year (Dec14) TTM:||Last Year (Dec13) TTM:|
|Accounts Receivable was $755 Mil.|
Revenue was 1582 + 1637 + 1710 + 1688 = $6,617 Mil.
Gross Profit was 223 + 240 + 248 + 234 = $945 Mil.
Total Current Assets was $2,954 Mil.
Total Assets was $4,930 Mil.
Property, Plant and Equipment(Net PPE) was $1,176 Mil.
Depreciation, Depletion and Amortization(DDA) was $213 Mil.
Selling, General & Admin. Expense(SGA) was $411 Mil.
Total Current Liabilities was $1,261 Mil.
Long-Term Debt was $1,613 Mil.
Net Income was 109 + 90 + 86 + 34 = $319 Mil.
Non Operating Income was -124 + 0 + 18 + 0 = $-106 Mil.
Cash Flow from Operations was 208 + 109 + 193 + 0 = $510 Mil.
|Accounts Receivable was $793 Mil.
Revenue was 1624 + 1669 + 1800 + 1676 = $6,769 Mil.
Gross Profit was 212 + 235 + 259 + 214 = $920 Mil.
Total Current Assets was $3,165 Mil.
Total Assets was $5,129 Mil.
Property, Plant and Equipment(Net PPE) was $1,225 Mil.
Depreciation, Depletion and Amortization(DDA) was $262 Mil.
Selling, General & Admin. Expense(SGA) was $410 Mil.
Total Current Liabilities was $1,268 Mil.
Long-Term Debt was $1,567 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)|
|=||(755 / 6617)||/||(793 / 6769)|
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)|
|=||(240 / 6769)||/||(223 / 6617)|
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 - (2954 + 1176) / 4930)||/||(1 - (3165 + 1225) / 5129)|
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))|
|=||(262 / (262 + 1225))||/||(213 / (213 + 1176))|
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)|
|=||(411 / 6617)||/||(410 / 6769)|
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)|
|=||((1613 + 1261) / 4930)||/||((1567 + 1268) / 5129)|
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|
|=||(319 - -106||-||510)||/||4930|
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 Holding Corp has a M-score of -2.58 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 Holding Corp Annual Data
Dana Holding Corp Quarterly Data