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Beneish M-Score 27.21 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 -2.61.
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 * 33.3667||+||0.528 * 0.9863||+||0.404 * 0.9954||+||0.892 * 1.1006||+||0.115 * 1.0455|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0511||+||4.679 * -0.0345||-||0.327 * 1.0015|
|This Year (Jun16) TTM:||Last Year (Jun15) TTM:|
|Accounts Receivable was $87.5 Mil.|
Revenue was 187.215 + 168.572 + 160.431 + 160.077 = $676.3 Mil.
Gross Profit was 128.493 + 114.658 + 107.89 + 104.691 = $455.7 Mil.
Total Current Assets was $166.9 Mil.
Total Assets was $7,258.5 Mil.
Property, Plant and Equipment(Net PPE) was $6,853.9 Mil.
Depreciation, Depletion and Amortization(DDA) was $207.9 Mil.
Selling, General & Admin. Expense(SGA) was $33.1 Mil.
Total Current Liabilities was $102.5 Mil.
Long-Term Debt was $4,280.9 Mil.
Net Income was 18.482 + 15.366 + 14.167 + 12.07 = $60.1 Mil.
Non Operating Income was 2.961 + 0.671 + 3.467 + 1.269 = $8.4 Mil.
Cash Flow from Operations was 76.93 + 89.841 + 65.776 + 69.456 = $302.0 Mil.
|Accounts Receivable was $2.4 Mil.
Revenue was 160.457 + 154.809 + 151.087 + 148.141 = $614.5 Mil.
Gross Profit was 107.985 + 104.79 + 100.397 + 95.249 = $408.4 Mil.
Total Current Assets was $155.3 Mil.
Total Assets was $6,038.7 Mil.
Property, Plant and Equipment(Net PPE) was $5,684.8 Mil.
Depreciation, Depletion and Amortization(DDA) was $180.5 Mil.
Selling, General & Admin. Expense(SGA) was $28.6 Mil.
Total Current Liabilities was $86.8 Mil.
Long-Term Debt was $3,554.4 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)|
|=||(87.473 / 676.295)||/||(2.382 / 614.494)|
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)|
|=||(408.421 / 614.494)||/||(455.732 / 676.295)|
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 - (166.917 + 6853.871) / 7258.503)||/||(1 - (155.275 + 5684.779) / 6038.731)|
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))|
|=||(180.524 / (180.524 + 5684.779))||/||(207.899 / (207.899 + 6853.871))|
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)|
|=||(33.136 / 676.295)||/||(28.643 / 614.494)|
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)|
|=||((4280.925 + 102.518) / 7258.503)||/||((3554.414 + 86.849) / 6038.731)|
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|
|=||(60.085 - 8.368||-||302.003)||/||7258.503|
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 27.21 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