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Beneish M-Score 36.73 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 -2.64.
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 * 43.861||+||0.528 * 0.9952||+||0.404 * 0.8112||+||0.892 * 1.0509||+||0.115 * 1.059|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0531||+||4.679 * -0.0365||-||0.327 * 1.0453|
|This Year (Sep15) TTM:||Last Year (Sep14) TTM:|
|Accounts Receivable was $79.5 Mil.|
Revenue was 160.077 + 160.457 + 154.809 + 151.104 = $626.4 Mil.
Gross Profit was 104.691 + 107.985 + 104.79 + 100.397 = $417.9 Mil.
Total Current Assets was $91.4 Mil.
Total Assets was $5,943.9 Mil.
Property, Plant and Equipment(Net PPE) was $5,649.8 Mil.
Depreciation, Depletion and Amortization(DDA) was $183.2 Mil.
Selling, General & Admin. Expense(SGA) was $28.9 Mil.
Total Current Liabilities was $98.3 Mil.
Long-Term Debt was $3,474.1 Mil.
Net Income was 12.07 + 13.448 + 18.699 + 10.893 = $55.1 Mil.
Non Operating Income was 1.269 + 1.805 + 8.14 + 3.434 = $14.6 Mil.
Cash Flow from Operations was 69.456 + 63.269 + 72.926 + 52.006 = $257.7 Mil.
|Accounts Receivable was $1.7 Mil.
Revenue was 148.141 + 151.422 + 148.876 + 147.676 = $596.1 Mil.
Gross Profit was 95.249 + 101.665 + 100.387 + 98.429 = $395.7 Mil.
Total Current Assets was $87.2 Mil.
Total Assets was $5,760.7 Mil.
Property, Plant and Equipment(Net PPE) was $5,431.3 Mil.
Depreciation, Depletion and Amortization(DDA) was $186.8 Mil.
Selling, General & Admin. Expense(SGA) was $26.1 Mil.
Total Current Liabilities was $101.9 Mil.
Long-Term Debt was $3,210.2 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)|
|=||(79.464 / 626.447)||/||(1.724 / 596.115)|
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)|
|=||(107.985 / 596.115)||/||(104.691 / 626.447)|
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 - (91.43 + 5649.814) / 5943.856)||/||(1 - (87.23 + 5431.345) / 5760.651)|
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))|
|=||(186.843 / (186.843 + 5431.345))||/||(183.188 / (183.188 + 5649.814))|
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)|
|=||(28.852 / 626.447)||/||(26.071 / 596.115)|
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)|
|=||((3474.111 + 98.261) / 5943.856)||/||((3210.21 + 101.888) / 5760.651)|
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|
|=||(55.11 - 14.648||-||257.657)||/||5943.856|
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 36.73 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