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D.R. Horton Inc (NYSE:DHI)
Beneish M-Score
-2.26 (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.

D.R. Horton Inc has a M-score of -2.26 suggests that the company is not a manipulator.

DHI' s Beneish M-Score Range Over the Past 10 Years
Min: -8.92   Max: -1.01
Current: -2.26

-8.92
-1.01

During the past 13 years, the highest Beneish M-Score of D.R. Horton Inc was -1.01. The lowest was -8.92. And the median was -1.87.


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 D.R. Horton Inc 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+0.528 * 0.9682+0.404 * 0.9146+0.892 * 1.1232+0.115 * 1.1313
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9911+4.679 * 0.0227-0.327 * 0.8747
=-2.26

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

This Year (Sep16) TTM:Last Year (Sep15) TTM:
Accounts Receivable was $0 Mil.
Revenue was 3741.2 + 3231.9 + 2767.9 + 2416.4 = $12,157 Mil.
Gross Profit was 822.9 + 708.9 + 598.6 + 524.2 = $2,655 Mil.
Total Current Assets was $9,654 Mil.
Total Assets was $11,559 Mil.
Property, Plant and Equipment(Net PPE) was $195 Mil.
Depreciation, Depletion and Amortization(DDA) was $61 Mil.
Selling, General & Admin. Expense(SGA) was $1,320 Mil.
Total Current Liabilities was $1,454 Mil.
Long-Term Debt was $3,271 Mil.
Net Income was 283.7 + 249.8 + 195.1 + 157.7 = $886 Mil.
Non Operating Income was -11.3 + 3.8 + 9.6 + 3.4 = $6 Mil.
Cash Flow from Operations was 529.4 + 61.7 + 28.4 + -1.5 = $618 Mil.
Accounts Receivable was $0 Mil.
Revenue was 3172.4 + 2950.8 + 2398 + 2302.6 = $10,824 Mil.
Gross Profit was 663.6 + 630.4 + 506 + 488.2 = $2,288 Mil.
Total Current Assets was $9,201 Mil.
Total Assets was $11,151 Mil.
Property, Plant and Equipment(Net PPE) was $147 Mil.
Depreciation, Depletion and Amortization(DDA) was $54 Mil.
Selling, General & Admin. Expense(SGA) was $1,186 Mil.
Total Current Liabilities was $1,400 Mil.
Long-Term Debt was $3,812 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)
=(0 / 12157.4) / (0 / 10823.8)
=0 / 0
=1

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)
=(2288.2 / 10823.8) / (2654.6 / 12157.4)
=0.2114045 / 0.21835261
=0.9682

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 - (9653.6 + 195.4) / 11558.9) / (1 - (9200.5 + 146.9) / 11151)
=0.1479293 / 0.16174334
=0.9146

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
=12157.4 / 10823.8
=1.1232

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))
=(54.1 / (54.1 + 146.9)) / (61 / (61 + 195.4))
=0.26915423 / 0.23790952
=1.1313

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)
=(1320.2 / 12157.4) / (1185.9 / 10823.8)
=0.1085923 / 0.10956411
=0.9911

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)
=((3271.3 + 1454.1) / 11558.9) / ((3811.5 + 1400.4) / 11151)
=0.40881053 / 0.46739306
=0.8747

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
=(886.3 - 5.5 - 618) / 11558.9
=0.0227

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.

D.R. Horton Inc has a M-score of -2.26 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.

D.R. Horton Inc Annual Data

Sep07Sep08Sep09Sep10Sep11Sep12Sep13Sep14Sep15Sep16
DSRI 1110.04540.93770.970111
GMI 3.0915-0.2918-7.5710.18511.04080.85250.88111.02621.03520.9681
AQI 0.93651.28650.52961.17231.11860.86791.37180.9441.01550.9146
SGI 0.75050.58830.55031.2030.82651.19721.43761.28211.34881.1232
DEPI 0.86630.82571.45131.31980.90821.24841.19791.02490.62251.1313
SGAI 1.04041.17041.22460.8371.1120.92220.86790.98260.91080.9911
LVGI 0.91591.23071.05710.84050.91410.98761.07410.91050.94810.8747
TATA -0.179-0.585-0.2638-0.09140.00990.17060.18940.11680.00470.0227
M-score -2.46-6.28-8.84-3.85-2.58-1.62-2.01-1.66-2.13-2.26

D.R. Horton Inc Quarterly Data

Jun14Sep14Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16
DSRI 1111111111
GMI 0.99051.02631.07741.12151.04761.03531.00440.97310.9850.9682
AQI 0.8940.9441.69811.02411.53911.01550.98790.99060.96870.9146
SGI 1.29231.28211.30081.33941.36581.34881.26341.21331.14471.1232
DEPI 1.13951.02490.91870.90770.89610.62250.55590.59470.80551.1313
SGAI 0.9730.98250.97190.96220.92320.91070.92340.92410.96350.9911
LVGI 0.91530.91050.93470.92170.99570.94810.92670.89740.87550.8747
TATA 0.11940.11680.12840.1050.05220.0047-0.0052-0.00740.02120.0227
M-score -1.66-1.66-1.27-1.59-1.66-2.13-2.29-2.34-2.25-2.26
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