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GuruFocus has detected 2 Warning Signs with Dillard's Inc $DDS.
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Dillard's Inc (NYSE:DDS)
Beneish M-Score
-2.89 (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.

Dillard's Inc has a M-score of -2.89 suggests that the company is not a manipulator.

DDS' s Beneish M-Score Range Over the Past 10 Years
Min: -3.6   Max: 3.56
Current: -2.89

-3.6
3.56

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.


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 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
=-2.89

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

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

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)
=(48.2 / 6417.942) / (47.138 / 6754.545)
=0.0075102 / 0.00697871
=1.0762

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)
=(2403.74 / 6754.545) / (2251.539 / 6417.942)
=0.35587001 / 0.35081947
=1.0144

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 - (1837.9 + 1790.3) / 3888.1) / (1 - (1668.883 + 1939.832) / 3865.625)
=0.06684499 / 0.06646015
=1.0058

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
=6417.942 / 6754.545
=0.9502

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))
=0.11503167 / 0.12080735
=0.9522

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)
=0.26201374 / 0.25118613
=1.0431

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)
=0.43892904 / 0.40698981
=1.0785

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
=(169.212 - -5.647 - 517.2) / 3888.1
=-0.088

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.


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.

Dillard's Inc Annual Data

Jan08Jan09Jan10Jan11Jan12Jan13Jan14Jan15Jan16Jan17
DSRI 1.09718.53060.80630.40841.08091.04160.98721.80850.83731.0761
GMI 1.01441.1340.90650.93720.98850.99251.00580.99731.03921.0144
AQI 1.01210.47740.91071.06373.62941.04650.950.95651.09781.0058
SGI 0.94380.94810.8911.00511.02351.0540.99111.01320.99620.9502
DEPI 1.02010.98141.010.94360.95860.93640.95420.97260.96150.9522
SGAI 1.04670.98970.95810.980.97830.96420.98091.0061.00721.0431
LVGI 1.01511.08220.94531.05360.98920.99771.00610.98441.04681.0785
TATA -0.0361-0.1433-0.1215-0.077-0.0196-0.0474-0.0444-0.0675-0.0489-0.0881
M-score -2.613.56-3.38-3.41-1.42-2.60-2.73-2.06-2.82-2.90

Dillard's Inc Quarterly Data

Oct14Jan15Apr15Jul15Oct15Jan16Apr16Jul16Oct16Jan17
DSRI 1.33111.80852.94912.46611.10810.83730.75320.87350.93791.0762
GMI 1.01290.99730.99871.00591.01131.03921.04851.04611.04811.0144
AQI 1.00070.95650.95631.00560.99731.09781.10981.05291.11241.0058
SGI 0.9871.01321.0171.02331.02060.99620.98160.96710.96110.9502
DEPI 1.00050.97260.97140.96950.94930.96150.94640.92950.95340.9522
SGAI 0.99991.0061.00581.00020.99861.00721.01331.02091.02561.0431
LVGI 0.98250.98440.96751.01081.05241.04681.04621.05790.95341.0785
TATA -0.0506-0.0675-0.0476-0.0538-0.0398-0.0489-0.0373-0.0689-0.0708-0.088
M-score -2.41-2.06-0.91-1.36-2.57-2.82-2.85-2.93-2.83-2.89
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