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Beneish M-Score -0.70 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.
Dean Foods Company has a M-score of -0.70 signals that the company is a manipulator.
During the past 13 years, the highest Beneish M-Score of Dean Foods Company was -0.70. The lowest was -4.47. And the median was -2.68.
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 Company 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 * 0.9967||+||0.528 * 1.0816||+||0.404 * 1.8904||+||0.892 * 0.9801||+||0.115 * 1.0403|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9406||+||4.679 * 0.2772||-||0.327 * 0.7224|
|This Year (Dec13) TTM:||Last Year (Dec12) TTM:|
|Accounts Receivable was $768 Mil.|
Revenue was 2295.45 + 2200.899 + 2227.542 + 2878.776 = $9,603 Mil.
Gross Profit was 445.77 + 441.285 + 472.3 + 713.776 = $2,073 Mil.
Total Current Assets was $1,151 Mil.
Total Assets was $2,802 Mil.
Property, Plant and Equipment(Net PPE) was $1,216 Mil.
Depreciation, Depletion and Amortization(DDA) was $174 Mil.
Selling, General & Admin. Expense(SGA) was $1,824 Mil.
Total Current Liabilities was $781 Mil.
Long-Term Debt was $897 Mil.
Net Income was -37.677 + 415.12 + -56.87 + 492.605 = $813 Mil.
Non Operating Income was -63.476 + 415.909 + 0.528 + 0.055 = $353 Mil.
Cash Flow from Operations was -72.187 + -13.54 + -130.642 + -100.272 = $-317 Mil.
|Accounts Receivable was $786 Mil.
Revenue was 2455.13 + 2236.969 + 2234.841 + 2870.452 = $9,797 Mil.
Gross Profit was 515.803 + 508.41 + 539.902 + 723.567 = $2,288 Mil.
Total Current Assets was $3,981 Mil.
Total Assets was $5,698 Mil.
Property, Plant and Equipment(Net PPE) was $1,249 Mil.
Depreciation, Depletion and Amortization(DDA) was $187 Mil.
Selling, General & Admin. Expense(SGA) was $1,979 Mil.
Total Current Liabilities was $2,410 Mil.
Long-Term Debt was $2,312 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)|
|=||(768.149 / 9602.667)||/||(786.31 / 9797.392)|
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)|
|=||(441.285 / 9797.392)||/||(445.77 / 9602.667)|
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 - (1150.698 + 1216.047) / 2802.045)||/||(1 - (3980.734 + 1248.637) / 5697.583)|
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))|
|=||(186.748 / (186.748 + 1248.637))||/||(173.829 / (173.829 + 1216.047))|
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)|
|=||(1824.366 / 9602.667)||/||(1978.96 / 9797.392)|
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)|
|=||((896.564 + 781.087) / 2802.045)||/||((2311.708 + 2410.387) / 5697.583)|
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|
|=||(813.178 - 353.016||-||-316.641)||/||2802.045|
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 Company has a M-score of -0.70 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 Company Annual Data
Dean Foods Company Quarterly Data