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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 3.56. The lowest was -3.60. And the median was -2.78.
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 * 1.0762||+||0.528 * 1.0144||+||0.404 * 1.0058||+||0.892 * 0.9502||+||0.115 * 0.9522|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0431||+||4.679 * -0.088||-||0.327 * 1.0785|
|This Year (Jan17) TTM:||Last Year (Jan16) TTM:|
|Accounts Receivable was $48 Mil.|
Revenue was 1983.9 + 1406.495 + 1488.75 + 1538.797 = $6,418 Mil.
Gross Profit was 628.3 + 527.63 + 495.391 + 600.218 = $2,252 Mil.
Total Current Assets was $1,838 Mil.
Total Assets was $3,888 Mil.
Property, Plant and Equipment(Net PPE) was $1,790 Mil.
Depreciation, Depletion and Amortization(DDA) was $246 Mil.
Selling, General & Admin. Expense(SGA) was $1,682 Mil.
Total Current Liabilities was $977 Mil.
Long-Term Debt was $730 Mil.
Net Income was 56.9 + 22.798 + 12.083 + 77.431 = $169 Mil.
Non Operating Income was -6.5 + -0.023 + 0.781 + 0.095 = $-6 Mil.
Cash Flow from Operations was 391.295 + 39.161 + 66.568 + 20.176 = $517 Mil.
|Accounts Receivable was $47 Mil.
Revenue was 2117.429 + 1472.854 + 1550.844 + 1613.418 = $6,755 Mil.
Gross Profit was 660.294 + 559.934 + 530.513 + 652.999 = $2,404 Mil.
Total Current Assets was $1,669 Mil.
Total Assets was $3,866 Mil.
Property, Plant and Equipment(Net PPE) was $1,940 Mil.
Depreciation, Depletion and Amortization(DDA) was $252 Mil.
Selling, General & Admin. Expense(SGA) was $1,697 Mil.
Total Current Liabilities was $751 Mil.
Long-Term Debt was $822 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)|
|=||(48.2 / 6417.942)||/||(47.138 / 6754.545)|
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)|
|=||(2403.74 / 6754.545)||/||(2251.539 / 6417.942)|
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 - (1837.9 + 1790.3) / 3888.1)||/||(1 - (1668.883 + 1939.832) / 3865.625)|
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))|
|=||(252.147 / (252.147 + 1939.832))||/||(246 / (246 + 1790.3))|
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)|
|=||(1681.589 / 6417.942)||/||(1696.648 / 6754.545)|
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)|
|=||((730.1 + 976.5) / 3888.1)||/||((822.054 + 751.216) / 3865.625)|
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|
|=||(169.212 - -5.647||-||517.2)||/||3888.1|
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 -2.89 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