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Beneish M-Score 35.47 higher than -2.22, which implies that it might have manipulated its financial results.
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 36.73. The lowest was -5.39. 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 * 42.3856||+||0.528 * 0.9911||+||0.404 * 0.9772||+||0.892 * 1.0728||+||0.115 * 1.0901|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0433||+||4.679 * -0.033||-||0.327 * 1.0671|
|This Year (Mar16) TTM:||Last Year (Mar15) TTM:|
|Accounts Receivable was $82.8 Mil.|
Revenue was 168.572 + 160.431 + 160.077 + 160.457 = $649.5 Mil.
Gross Profit was 114.658 + 107.89 + 104.691 + 107.985 = $435.2 Mil.
Total Current Assets was $158.6 Mil.
Total Assets was $7,291.4 Mil.
Property, Plant and Equipment(Net PPE) was $6,896.6 Mil.
Depreciation, Depletion and Amortization(DDA) was $198.4 Mil.
Selling, General & Admin. Expense(SGA) was $31.2 Mil.
Total Current Liabilities was $108.0 Mil.
Long-Term Debt was $4,546.7 Mil.
Net Income was 15.366 + 14.167 + 12.07 + 13.448 = $55.1 Mil.
Non Operating Income was 0.671 + 3.467 + 1.269 + 1.805 = $7.2 Mil.
Cash Flow from Operations was 89.841 + 65.776 + 69.456 + 63.269 = $288.3 Mil.
|Accounts Receivable was $1.8 Mil.
Revenue was 154.809 + 151.091 + 148.146 + 151.426 = $605.5 Mil.
Gross Profit was 104.79 + 100.397 + 95.249 + 101.665 = $402.1 Mil.
Total Current Assets was $95.7 Mil.
Total Assets was $6,012.8 Mil.
Property, Plant and Equipment(Net PPE) was $5,717.8 Mil.
Depreciation, Depletion and Amortization(DDA) was $179.8 Mil.
Selling, General & Admin. Expense(SGA) was $27.9 Mil.
Total Current Liabilities was $93.8 Mil.
Long-Term Debt was $3,503.5 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)|
|=||(82.756 / 649.537)||/||(1.82 / 605.472)|
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)|
|=||(402.101 / 605.472)||/||(435.224 / 649.537)|
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 - (158.615 + 6896.577) / 7291.424)||/||(1 - (95.681 + 5717.767) / 6012.805)|
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))|
|=||(179.814 / (179.814 + 5717.767))||/||(198.447 / (198.447 + 6896.577))|
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)|
|=||(31.206 / 649.537)||/||(27.882 / 605.472)|
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)|
|=||((4546.709 + 108.011) / 7291.424)||/||((3503.466 + 93.771) / 6012.805)|
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|
|=||(55.051 - 7.212||-||288.342)||/||7291.424|
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 35.47 signals that the company is likely to 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