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GuruFocus has detected 1 Warning Sign with Dean Foods Co $DF.
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Dean Foods Co (NYSE:DF)
Beneish M-Score
-2.58 (As of Today)

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 -2.59 suggests that the company is not a manipulator.

DF' s Beneish M-Score Range Over the Past 10 Years
Min: -4.33   Max: -0.65
Current: -2.58

-4.33
-0.65

During the past 13 years, the highest Beneish M-Score of Dean Foods Co was -0.65. The lowest was -4.33. And the median was -2.73.


Definition

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 * 1.0751+0.528 * 0.9431+0.404 * 1.3822+0.892 * 0.9493+0.115 * 0.9851
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0319+4.679 * -0.055-0.327 * 0.9658
=-2.59

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

This Year (Dec16) TTM:Last Year (Dec15) TTM:
Accounts Receivable was $675 Mil.
Revenue was 2018.009 + 1964.601 + 1848.788 + 1878.828 = $7,710 Mil.
Gross Profit was 501.42 + 488.775 + 493.253 + 504.068 = $1,988 Mil.
Total Current Assets was $1,059 Mil.
Total Assets was $2,606 Mil.
Property, Plant and Equipment(Net PPE) was $1,164 Mil.
Depreciation, Depletion and Amortization(DDA) was $178 Mil.
Selling, General & Admin. Expense(SGA) was $1,694 Mil.
Total Current Liabilities was $848 Mil.
Long-Term Debt was $745 Mil.
Net Income was 32.831 + 14.526 + 33.371 + 39.201 = $120 Mil.
Non Operating Income was 1.393 + 1.178 + 2.21 + 0.997 = $6 Mil.
Cash Flow from Operations was 72.795 + 59.299 + 79.089 + 46.23 = $257 Mil.
Accounts Receivable was $661 Mil.
Revenue was 2022.5 + 2033.693 + 2014.706 + 2050.762 = $8,122 Mil.
Gross Profit was 508.471 + 491.988 + 495.641 + 478.309 = $1,974 Mil.
Total Current Assets was $1,078 Mil.
Total Assets was $2,520 Mil.
Property, Plant and Equipment(Net PPE) was $1,174 Mil.
Depreciation, Depletion and Amortization(DDA) was $177 Mil.
Selling, General & Admin. Expense(SGA) was $1,730 Mil.
Total Current Liabilities was $762 Mil.
Long-Term Debt was $833 Mil.



1. DSRI = Days Sales in Receivables Index

Measured as the ratio of days’ sales in receivables in year t to year t-1.

A large increase in DSR could be indicative of revenue inflation.

DSRI=(Receivables_t / Revenue_t) / (Receivables_t-1 / Revenue_t-1)
=(674.778 / 7710.226) / (661.141 / 8121.661)
=0.08751728 / 0.08140465
=1.0751

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.

GMI=GrossMargin_t-1 / GrossMargin_t
=(GrossProfit_t-1 / Revenue_t-1) / (GrossProfit_t / Revenue_t)
=(1974.409 / 8121.661) / (1987.516 / 7710.226)
=0.24310409 / 0.25777662
=0.9431

3. AQI = Asset Quality Index

AQI is the ratio of asset quality in year t to year t-1.

Asset quality is measured as the ratio of non-current assets other than plant, property and equipment to total assets.

AQI=(1 - (CurrentAssets_t + PPE_t) / TotalAssets_t) / (1 - (CurrentAssets_t-1 + PPE_t-1) / TotalAssets_t-1)
=(1 - (1058.63 + 1163.851) / 2606.227) / (1 - (1077.563 + 1174.137) / 2520.163)
=0.14724197 / 0.10652605
=1.3822

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.

SGI=Sales_t / Sales_t-1
=Revenue_t / Revenue_t-1
=7710.226 / 8121.661
=0.9493

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))
=(176.884 / (176.884 + 1174.137)) / (178.385 / (178.385 + 1163.851))
=0.13092617 / 0.13290137
=0.9851

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)
=(1694.377 / 7710.226) / (1729.641 / 8121.661)
=0.21975711 / 0.21296641
=1.0319

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)
=((745.245 + 847.787) / 2606.227) / ((833.08 + 761.895) / 2520.163)
=0.61124069 / 0.63288565
=0.9658

8. TATA = Total Accruals to Total Assets

Total accruals calculated as the change in working capital accounts other than cash less depreciation.

TATA=(IncomefromContinuingOperations_t - CashFlowsfromOperations_t) / TotalAssets_t
=(NetIncome_t - NonOperatingIncome_t - CashFlowsfromOperations_t) / TotalAssets_t
=(119.929 - 5.778 - 257.413) / 2606.227
=-0.055

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 -2.59 suggests that the company will not be a manipulator.


Related Terms

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


Historical Data

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

Dean Foods Co Annual Data

Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15Dec16
DSRI 0.99530.87171.16821.10911.03910.91741.00491.0030.95261.0751
GMI 1.17160.97920.84641.09681.180.95561.09831.16810.72440.9431
AQI 0.9891.00820.98330.96970.54250.29931.89040.96910.70761.3822
SGI 1.17071.05350.89230.97360.89790.95460.97211.0540.85460.9493
DEPI 0.98950.98861.07211.0291.17130.68731.04031.01770.93870.9851
SGAI 0.88871.02141.18811.01680.88880.99470.92520.94621.23121.0319
LVGI 1.41330.90550.87540.96261.31290.94160.72241.03181.02450.9658
TATA -0.0303-0.0757-0.0541-0.0537-0.3504-0.05710.2773-0.0626-0.1495-0.055
M-score -2.50-2.89-2.75-2.60-4.33-3.19-0.68-2.64-3.67-2.59

Dean Foods Co Quarterly Data

Sep14Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16Dec16
DSRI 1.0641.0030.84060.80330.95260.95261.04681.11341.06721.0751
GMI 1.17551.16811.03970.88910.79460.72440.74880.80810.86850.9431
AQI 0.960.96910.85630.83180.81910.70760.83781.33591.35281.3822
SGI 1.02481.0541.01630.95690.90330.85460.86290.88110.90820.9493
DEPI 1.07561.01770.9960.9510.92520.93870.90080.96870.98540.9851
SGAI 0.92760.94620.99771.08031.16081.23121.20381.161.10851.0319
LVGI 1.01131.03180.99990.99851.01131.02450.98280.98450.96020.9658
TATA 0.0085-0.0626-0.1271-0.1652-0.1627-0.1495-0.0802-0.0617-0.0668-0.055
M-score -2.27-2.64-3.24-3.62-3.59-3.67-3.17-2.76-2.75-2.59
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