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Dean Foods Company (NYSE:DF)
Beneish M-Score
-0.70 (As of Today)

Warning Sign:

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.

DF' s 10-Year Beneish M-Score Range
Min: -4.47   Max: -0.7
Current: -0.7

-4.47
-0.7

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.


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 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
=-0.70

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.

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

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)
=(768.149 / 9602.667) / (786.31 / 9797.392)
=0.0799933 / 0.08025707
=0.9967

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)
=(441.285 / 9797.392) / (445.77 / 9602.667)
=0.23349908 / 0.21589117
=1.0816

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 - (1150.698 + 1216.047) / 2802.045) / (1 - (3980.734 + 1248.637) / 5697.583)
=0.15535082 / 0.0821773
=1.8904

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
=9602.667 / 9797.392
=0.9801

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))
=0.13010307 / 0.12506799
=1.0403

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)
=0.18998534 / 0.20198845
=0.9406

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)
=0.59872379 / 0.82878915
=0.7224

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
=(813.178 - 353.016 - -316.641) / 2802.045
=0.2772

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.


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 own currency.

Dean Foods Company Annual Data

Dec04Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13
DSRI 1.05350.94390.98370.99530.87171.16820.98990.97161.09911.0049
GMI 1.0540.96690.93571.17160.97920.84641.12681.03841.05691.0983
AQI 1.06390.94550.96910.9891.00820.98330.96970.54250.29931.8904
SGI 1.05891.04620.99251.17071.05350.89231.09080.96030.79670.9721
DEPI 0.97280.93120.95360.98950.98861.07210.93280.97820.90791.0403
SGAI 1.03111.02571.05710.88871.02141.18810.95111.01240.93360.9252
LVGI 0.99191.14941.00821.41330.90550.87540.96261.31290.94160.7224
TATA -0.0363-0.0351-0.0495-0.0303-0.0757-0.0541-0.0557-0.355-0.05710.2773
M-score -2.50-2.76-2.80-2.50-2.89-2.75-2.60-4.47-3.07-0.68

Dean Foods Company Quarterly Data

Sep11Dec11Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13
DSRI 1.00640.97161.04311.10851.29871.04051.17590.8840.71090.9967
GMI 1.09521.03841.02570.98610.93411.02261.03391.081.1361.0816
AQI 0.66670.54250.66650.67610.98770.29930.9370.38990.43261.8904
SGI 1.07970.96030.93860.82810.71440.84160.85550.94241.05840.9801
DEPI 0.93740.97821.11051.30851.45720.90791.14990.68890.63431.0403
SGAI 0.94231.01241.00681.04311.10250.95440.9530.9150.87270.9406
LVGI 1.30561.31291.30321.30010.96850.94160.76470.78330.73810.7224
TATA -0.335-0.355-0.3467-0.3709-0.0924-0.05710.04650.16950.2120.2772
M-score -4.15-4.47-4.33-4.48-2.89-3.11-2.13-2.00-1.79-0.70
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