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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.
Douglas Emmett Inc has a M-score of -2.61 suggests that the company is not a manipulator.
During the past 13 years, the highest Beneish M-Score of Douglas Emmett Inc was -1.05. The lowest was -5.39. 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 Douglas Emmett 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 * 0.9622||+||0.528 * 1.0083||+||0.404 * 1.0954||+||0.892 * 1.0246||+||0.115 * 0.9172|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.8834||+||4.679 * -0.0366||-||0.327 * 0.9887|
|This Year (Jun14) TTM:||Last Year (Jun13) TTM:|
|Accounts Receivable was $1.5 Mil.|
Revenue was 151.426 + 148.876 + 147.676 + 149.686 = $597.7 Mil.
Gross Profit was 101.665 + 100.387 + 98.429 + 98.035 = $398.5 Mil.
Total Current Assets was $86.4 Mil.
Total Assets was $5,776.0 Mil.
Property, Plant and Equipment(Net PPE) was $5,457.5 Mil.
Depreciation, Depletion and Amortization(DDA) was $183.6 Mil.
Selling, General & Admin. Expense(SGA) was $26.0 Mil.
Total Current Liabilities was $80.3 Mil.
Long-Term Debt was $3,220.2 Mil.
Net Income was 13.363 + 12.976 + 8.843 + 10.751 = $45.9 Mil.
Non Operating Income was 3.855 + 3.919 + 0.504 + 1.257 = $9.5 Mil.
Cash Flow from Operations was 53.367 + 73.435 + 53.249 + 67.703 = $247.8 Mil.
|Accounts Receivable was $1.6 Mil.
Revenue was 148.716 + 145.458 + 143.15 + 145.993 = $583.3 Mil.
Gross Profit was 101.052 + 99.14 + 95.297 + 96.701 = $392.2 Mil.
Total Current Assets was $251.6 Mil.
Total Assets was $5,985.5 Mil.
Property, Plant and Equipment(Net PPE) was $5,514.4 Mil.
Depreciation, Depletion and Amortization(DDA) was $169.7 Mil.
Selling, General & Admin. Expense(SGA) was $28.7 Mil.
Total Current Liabilities was $46.4 Mil.
Long-Term Debt was $3,413.1 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)|
|=||(1.53 / 597.664)||/||(1.552 / 583.317)|
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)|
|=||(100.387 / 583.317)||/||(101.665 / 597.664)|
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 - (86.404 + 5457.547) / 5776.046)||/||(1 - (251.556 + 5514.381) / 5985.51)|
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))|
|=||(169.67 / (169.67 + 5514.381))||/||(183.598 / (183.598 + 5457.547))|
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)|
|=||(25.959 / 597.664)||/||(28.68 / 583.317)|
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)|
|=||((3220.21 + 80.296) / 5776.046)||/||((3413.052 + 46.377) / 5985.51)|
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|
|=||(45.933 - 9.535||-||247.754)||/||5776.046|
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.
Douglas Emmett Inc has a M-score of -2.61 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
Douglas Emmett Inc Annual Data
Douglas Emmett Inc Quarterly Data