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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.
During the past 13 years, the highest Beneish M-Score of Dean Foods Co was 0.86. The lowest was -4.48. And the median was -2.60.
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 * 0.9526||+||0.528 * 0.7946||+||0.404 * 0.8191||+||0.892 * 0.9033||+||0.115 * 0.9252|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.1608||+||4.679 * -0.1627||-||0.327 * 1.0113|
|This Year (Sep15) TTM:||Last Year (Sep14) TTM:|
|Accounts Receivable was $668 Mil.|
Revenue was 2033.693 + 2014.706 + 2050.762 + 2395.007 = $8,494 Mil.
Gross Profit was 491.988 + 495.641 + 478.309 + 441.4 = $1,907 Mil.
Total Current Assets was $1,069 Mil.
Total Assets was $2,497 Mil.
Property, Plant and Equipment(Net PPE) was $1,138 Mil.
Depreciation, Depletion and Amortization(DDA) was $174 Mil.
Selling, General & Admin. Expense(SGA) was $1,703 Mil.
Total Current Liabilities was $758 Mil.
Long-Term Debt was $839 Mil.
Net Income was 20.233 + 26.519 + -73.74 + 5.277 = $-22 Mil.
Non Operating Income was 0.964 + 0.294 + -43.163 + -0.577 = $-42 Mil.
Cash Flow from Operations was 50.257 + 114.192 + 157.579 + 104.875 = $427 Mil.
|Accounts Receivable was $777 Mil.
Revenue was 2373.28 + 2393.869 + 2341.04 + 2295.45 = $9,404 Mil.
Gross Profit was 416.8 + 399.088 + 416.175 + 445.77 = $1,678 Mil.
Total Current Assets was $1,214 Mil.
Total Assets was $2,790 Mil.
Property, Plant and Equipment(Net PPE) was $1,181 Mil.
Depreciation, Depletion and Amortization(DDA) was $165 Mil.
Selling, General & Admin. Expense(SGA) was $1,624 Mil.
Total Current Liabilities was $788 Mil.
Long-Term Debt was $978 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)|
|=||(668.329 / 8494.168)||/||(776.741 / 9403.639)|
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)|
|=||(495.641 / 9403.639)||/||(491.988 / 8494.168)|
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 - (1069.006 + 1137.991) / 2496.811)||/||(1 - (1213.558 + 1180.99) / 2789.89)|
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))|
|=||(164.827 / (164.827 + 1180.99))||/||(173.623 / (173.623 + 1137.991))|
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)|
|=||(1702.74 / 8494.168)||/||(1623.902 / 9403.639)|
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)|
|=||((839.374 + 758.196) / 2496.811)||/||((977.516 + 787.614) / 2789.89)|
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|
|=||(-21.711 - -42.482||-||426.903)||/||2496.811|
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 -3.59 suggests that the company will not 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