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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 -0.66. The lowest was -4.28. And the median was -2.74.
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 * 0.7244||+||0.404 * 0.726||+||0.892 * 0.8546||+||0.115 * 0.9387|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.2312||+||4.679 * -0.1491||-||0.327 * 1.0264|
|This Year (Dec15) TTM:||Last Year (Dec14) TTM:|
|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 $2,528 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 $841 Mil.
Net Income was 18.48 + 20.233 + 26.519 + -73.74 = $-9 Mil.
Non Operating Income was 2.047 + 0.964 + 0.294 + -43.163 = $-40 Mil.
Cash Flow from Operations was 86.125 + 50.257 + 114.192 + 157.579 = $408 Mil.
|Accounts Receivable was $812 Mil.
Revenue was 2395.007 + 2373.28 + 2393.869 + 2341.04 = $9,503 Mil.
Gross Profit was 441.4 + 416.8 + 399.088 + 416.175 = $1,673 Mil.
Total Current Assets was $1,180 Mil.
Total Assets was $2,770 Mil.
Property, Plant and Equipment(Net PPE) was $1,173 Mil.
Depreciation, Depletion and Amortization(DDA) was $164 Mil.
Selling, General & Admin. Expense(SGA) was $1,644 Mil.
Total Current Liabilities was $794 Mil.
Long-Term Debt was $916 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)|
|=||(661.141 / 8121.661)||/||(812.073 / 9503.196)|
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)|
|=||(491.988 / 9503.196)||/||(508.471 / 8121.661)|
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 - (1077.563 + 1174.137) / 2528.015)||/||(1 - (1180.06 + 1172.596) / 2769.636)|
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))|
|=||(164.297 / (164.297 + 1172.596))||/||(176.884 / (176.884 + 1174.137))|
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)|
|=||(1729.641 / 8121.661)||/||(1643.797 / 9503.196)|
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)|
|=||((840.932 + 761.895) / 2528.015)||/||((916.481 + 794.451) / 2769.636)|
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|
|=||(-8.508 - -39.858||-||408.153)||/||2528.015|
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 -3.66 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