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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.
Dean Foods Co has a M-score of -2.01 signals that the company is a manipulator.
During the past 13 years, the highest Beneish M-Score of Dean Foods Co was 1.09. The lowest was -4.43. And the median was -2.58.
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 Dean Foods Co 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 * 1.1381||+||0.528 * 1.2791||+||0.404 * 1.0737||+||0.892 * 0.9573||+||0.115 * 1.2214|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.8363||+||4.679 * 0.027||-||0.327 * 0.9297|
|This Year (Jun14) TTM:||Last Year (Jun13) TTM:|
|Accounts Receivable was $799 Mil.|
Revenue was 2393.869 + 2341.04 + 2295.45 + 2200.899 = $9,231 Mil.
Gross Profit was 399.088 + 416.175 + 445.77 + 441.285 = $1,702 Mil.
Total Current Assets was $1,212 Mil.
Total Assets was $2,803 Mil.
Property, Plant and Equipment(Net PPE) was $1,184 Mil.
Depreciation, Depletion and Amortization(DDA) was $166 Mil.
Selling, General & Admin. Expense(SGA) was $1,623 Mil.
Total Current Liabilities was $757 Mil.
Long-Term Debt was $986 Mil.
Net Income was -0.645 + -8.956 + -37.677 + 415.12 = $368 Mil.
Non Operating Income was -0.048 + 0.321 + -63.476 + 415.909 = $353 Mil.
Cash Flow from Operations was -7.531 + 32.799 + -72.187 + -13.54 = $-60 Mil.
|Accounts Receivable was $733 Mil.
Revenue was 2227.542 + 2292.43 + 1979.427 + 3143.252 = $9,643 Mil.
Gross Profit was 472.3 + 495.232 + 525.268 + 781.757 = $2,275 Mil.
Total Current Assets was $1,691 Mil.
Total Assets was $3,321 Mil.
Property, Plant and Equipment(Net PPE) was $1,181 Mil.
Depreciation, Depletion and Amortization(DDA) was $209 Mil.
Selling, General & Admin. Expense(SGA) was $2,027 Mil.
Total Current Liabilities was $1,098 Mil.
Long-Term Debt was $1,123 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)|
|=||(798.802 / 9231.258)||/||(733.131 / 9642.651)|
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)|
|=||(416.175 / 9642.651)||/||(399.088 / 9231.258)|
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 - (1212.002 + 1183.854) / 2803.322)||/||(1 - (1690.588 + 1181.094) / 3321.317)|
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))|
|=||(208.937 / (208.937 + 1181.094))||/||(166.136 / (166.136 + 1183.854))|
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)|
|=||(1622.558 / 9231.258)||/||(2026.611 / 9642.651)|
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)|
|=||((985.641 + 757.476) / 2803.322)||/||((1123.1 + 1098.222) / 3321.317)|
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|
|=||(367.842 - 352.706||-||-60.459)||/||2803.322|
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.
Dean Foods Co has a M-score of -2.01 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
Dean Foods Co Annual Data
Dean Foods Co Quarterly Data