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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 Dillard's Inc was 4.20. The lowest was -3.78. And the median was -2.85.
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 Dillard's 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 * 0.8735||+||0.528 * 1.0461||+||0.404 * 1.0529||+||0.892 * 0.9671||+||0.115 * 0.9295|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0209||+||4.679 * -0.0689||-||0.327 * 1.0579|
|This Year (Jul16) TTM:||Last Year (Jul15) TTM:|
|Accounts Receivable was $41 Mil.|
Revenue was 1488.75 + 1538.797 + 2117.429 + 1472.854 = $6,618 Mil.
Gross Profit was 495.391 + 600.218 + 660.294 + 559.934 = $2,316 Mil.
Total Current Assets was $1,737 Mil.
Total Assets was $3,843 Mil.
Property, Plant and Equipment(Net PPE) was $1,852 Mil.
Depreciation, Depletion and Amortization(DDA) was $252 Mil.
Selling, General & Admin. Expense(SGA) was $1,683 Mil.
Total Current Liabilities was $764 Mil.
Long-Term Debt was $818 Mil.
Net Income was 12.083 + 77.431 + 84.105 + 45.744 = $219 Mil.
Non Operating Income was 0.781 + 0.095 + -1.163 + 9.4 = $9 Mil.
Cash Flow from Operations was 66.568 + 20.176 + 366.935 + 21.317 = $475 Mil.
|Accounts Receivable was $49 Mil.
Revenue was 1550.844 + 1613.418 + 2179.556 + 1499.144 = $6,843 Mil.
Gross Profit was 530.513 + 652.999 + 746.887 + 574.701 = $2,505 Mil.
Total Current Assets was $1,764 Mil.
Total Assets was $4,016 Mil.
Property, Plant and Equipment(Net PPE) was $1,999 Mil.
Depreciation, Depletion and Amortization(DDA) was $250 Mil.
Selling, General & Admin. Expense(SGA) was $1,704 Mil.
Total Current Liabilities was $741 Mil.
Long-Term Debt was $821 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)|
|=||(41.21 / 6617.83)||/||(48.783 / 6842.962)|
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)|
|=||(2505.1 / 6842.962)||/||(2315.837 / 6617.83)|
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 - (1736.634 + 1851.831) / 3843.008)||/||(1 - (1764.096 + 1998.875) / 4015.593)|
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))|
|=||(250.24 / (250.24 + 1998.875))||/||(251.804 / (251.804 + 1851.831))|
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)|
|=||(1682.692 / 6617.83)||/||(1704.365 / 6842.962)|
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)|
|=||((817.689 + 763.86) / 3843.008)||/||((820.678 + 741.454) / 4015.593)|
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|
|=||(219.363 - 9.113||-||474.996)||/||3843.008|
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.
Dillard's Inc has a M-score of -2.93 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
Dillard's Inc Annual Data
Dillard's Inc Quarterly Data