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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 Douglas Emmett Inc was 35.15. The lowest was -3.06. And the median was -2.62.
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 * 0.9991||+||0.528 * 0.9844||+||0.404 * 0.614||+||0.892 * 1.1679||+||0.115 * 1.0383|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9814||+||4.679 * -0.0362||-||0.327 * 0.9644|
* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.
|This Year (Dec16) TTM:||Last Year (Dec15) TTM:|
|Accounts Receivable was $93.2 Mil.|
Revenue was 194.643 + 192.121 + 187.215 + 168.572 = $742.6 Mil.
Gross Profit was 132.292 + 129.245 + 128.493 + 114.658 = $504.7 Mil.
Total Current Assets was $208.3 Mil.
Total Assets was $7,613.7 Mil.
Property, Plant and Equipment(Net PPE) was $7,151.1 Mil.
Depreciation, Depletion and Amortization(DDA) was $230.7 Mil.
Selling, General & Admin. Expense(SGA) was $35.0 Mil.
Total Current Liabilities was $110.1 Mil.
Long-Term Debt was $4,369.5 Mil.
Net Income was 19.701 + 31.848 + 18.482 + 15.366 = $85.4 Mil.
Non Operating Income was 2.831 + 14.958 + 2.961 + 0.671 = $21.4 Mil.
Cash Flow from Operations was 73.786 + 98.892 + 76.93 + 89.841 = $339.4 Mil.
|Accounts Receivable was $79.8 Mil.
Revenue was 160.431 + 160.077 + 160.457 + 154.809 = $635.8 Mil.
Gross Profit was 107.89 + 104.691 + 107.985 + 104.79 = $425.4 Mil.
Total Current Assets was $183.5 Mil.
Total Assets was $6,066.2 Mil.
Property, Plant and Equipment(Net PPE) was $5,552.6 Mil.
Depreciation, Depletion and Amortization(DDA) was $186.2 Mil.
Selling, General & Admin. Expense(SGA) was $30.5 Mil.
Total Current Liabilities was $89.7 Mil.
Long-Term Debt was $3,611.3 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)|
|=||(93.165 / 742.551)||/||(79.837 / 635.774)|
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)|
|=||(425.356 / 635.774)||/||(504.688 / 742.551)|
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 - (208.257 + 7151.076) / 7613.705)||/||(1 - (183.542 + 5552.559) / 6066.161)|
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))|
|=||(186.233 / (186.233 + 5552.559))||/||(230.716 / (230.716 + 7151.076))|
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)|
|=||(34.957 / 742.551)||/||(30.496 / 635.774)|
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)|
|=||((4369.537 + 110.086) / 7613.705)||/||((3611.276 + 89.739) / 6066.161)|
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|
|=||(85.397 - 21.421||-||339.449)||/||7613.705|
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 -2.65 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