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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 -2.60.
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 * 1.0038||+||0.528 * 0.9915||+||0.404 * 1.1798||+||0.892 * 1.0605||+||0.115 * 0.9994|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0521||+||4.679 * -0.0375||-||0.327 * 1.0339|
|This Year (Dec15) TTM:||Last Year (Dec14) TTM:|
|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 $5,595.5 Mil.
Depreciation, Depletion and Amortization(DDA) was $186.2 Mil.
Selling, General & Admin. Expense(SGA) was $30.5 Mil.
Total Current Liabilities was $57.4 Mil.
Long-Term Debt was $3,611.3 Mil.
Net Income was 14.167 + 12.07 + 13.448 + 18.699 = $58.4 Mil.
Non Operating Income was 3.467 + 1.269 + 1.805 + 8.14 = $14.7 Mil.
Cash Flow from Operations was 65.776 + 69.456 + 63.269 + 72.926 = $271.4 Mil.
|Accounts Receivable was $75.0 Mil.
Revenue was 151.087 + 148.141 + 151.422 + 148.876 = $599.5 Mil.
Gross Profit was 100.397 + 95.249 + 101.665 + 100.387 = $397.7 Mil.
Total Current Assets was $96.0 Mil.
Total Assets was $5,939.0 Mil.
Property, Plant and Equipment(Net PPE) was $5,604.7 Mil.
Depreciation, Depletion and Amortization(DDA) was $186.4 Mil.
Selling, General & Admin. Expense(SGA) was $27.3 Mil.
Total Current Liabilities was $54.4 Mil.
Long-Term Debt was $3,419.7 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)|
|=||(79.837 / 635.774)||/||(74.997 / 599.526)|
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)|
|=||(104.691 / 599.526)||/||(107.89 / 635.774)|
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 - (183.542 + 5595.502) / 6066.161)||/||(1 - (95.963 + 5604.749) / 5938.973)|
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))|
|=||(186.428 / (186.428 + 5604.749))||/||(186.233 / (186.233 + 5595.502))|
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)|
|=||(30.496 / 635.774)||/||(27.332 / 599.526)|
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)|
|=||((3611.276 + 57.417) / 6066.161)||/||((3419.667 + 54.364) / 5938.973)|
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|
|=||(58.384 - 14.681||-||271.427)||/||6066.161|
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 -2.55 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