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DR Horton Inc (NYSE:DHI)
Beneish M-Score
-1.44 (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.

DR Horton Inc has a M-score of -1.63 signals that the company is a manipulator.

DHI' s 10-Year Beneish M-Score Range
Min: -8.84   Max: 0.04
Current: -1.44

-8.84
0.04

During the past 13 years, the highest Beneish M-Score of DR Horton Inc was 0.04. The lowest was -8.84. And the median was -1.69.


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 DR 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 * 0.9906+0.404 * 0.894+0.892 * 1.2923+0.115 * 1.3263
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9729+4.679 * 0.1212-0.327 * 0.9153
=-1.63

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

This Year (Jun14) TTM:Last Year (Jun13) TTM:
Accounts Receivable was $0 Mil.
Revenue was 2147 + 1735 + 1670.6 + 1859.9 = $7,413 Mil.
Gross Profit was 421.5 + 415.2 + 397 + 413.4 = $1,647 Mil.
Total Current Assets was $8,553 Mil.
Total Assets was $9,717 Mil.
Property, Plant and Equipment(Net PPE) was $183 Mil.
Depreciation, Depletion and Amortization(DDA) was $33 Mil.
Selling, General & Admin. Expense(SGA) was $905 Mil.
Total Current Liabilities was $1,255 Mil.
Long-Term Debt was $3,445 Mil.
Net Income was 113.1 + 131 + 123.2 + 139.5 = $507 Mil.
Non Operating Income was 3.1 + 2.8 + 3.3 + -10.3 = $-1 Mil.
Cash Flow from Operations was -308.2 + -259.4 + -7.5 + -94.8 = $-670 Mil.
Accounts Receivable was $0 Mil.
Revenue was 1692.8 + 1431.6 + 1275.1 + 1336.2 = $5,736 Mil.
Gross Profit was 397.4 + 322.4 + 272.8 + 269.9 = $1,263 Mil.
Total Current Assets was $7,256 Mil.
Total Assets was $8,287 Mil.
Property, Plant and Equipment(Net PPE) was $96 Mil.
Depreciation, Depletion and Amortization(DDA) was $25 Mil.
Selling, General & Admin. Expense(SGA) was $720 Mil.
Total Current Liabilities was $1,296 Mil.
Long-Term Debt was $3,084 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 / 7412.5) / (0 / 5735.7)
=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)
=(415.2 / 5735.7) / (421.5 / 7412.5)
=0.22011263 / 0.22220573
=0.9906

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 - (8553.3 + 183.4) / 9716.6) / (1 - (7256.1 + 96.1) / 8287)
=0.10084803 / 0.11280319
=0.894

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
=7412.5 / 5735.7
=1.2923

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))
=(24.6 / (24.6 + 96.1)) / (33.3 / (33.3 + 183.4))
=0.2038111 / 0.15366867
=1.3263

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)
=(905.1 / 7412.5) / (719.9 / 5735.7)
=0.12210455 / 0.12551214
=0.9729

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)
=((3445.3 + 1255) / 9716.6) / ((3083.6 + 1295.9) / 8287)
=0.48373917 / 0.52847834
=0.9153

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
=(506.8 - -1.1 - -669.9) / 9716.6
=0.1212

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.

DR Horton Inc has a M-score of -1.63 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.

DR Horton Inc Annual Data

Sep04Sep05Sep06Sep07Sep08Sep09Sep10Sep11Sep12Sep13
DSRI 1111110.04540.93770.970
GMI 0.88150.90211.13313.0915-0.2918-7.5710.18511.04080.85250.8811
AQI 0.95571.10040.7650.93651.28650.52961.17231.11860.86790.8734
SGI 1.24211.27881.08570.75050.58830.55031.2030.82651.19721.4376
DEPI 0.9551.08341.08770.86630.82571.45131.31980.90821.24841.1725
SGAI 0.94990.9951.11191.04041.17041.22460.8371.13360.90470.8679
LVGI 0.95711.02731.00370.91591.23071.05710.84050.91410.98761.0741
TATA 0.15240.16620.164-0.179-0.585-0.2503-0.07820.01060.17180.1913
M-score -1.61-1.46-1.67-2.46-6.28-8.77-3.79-2.58-1.61-2.21

DR Horton Inc Quarterly Data

Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14
DSRI 0.90480.78060.970000111
GMI 0.90560.88210.85250.84950.85810.85640.8810.88850.90590.9906
AQI 1.1150.80520.86790.84180.87421.03850.87340.7691.30290.894
SGI 1.01831.18041.19721.25761.30961.39351.43761.40921.341.2923
DEPI 0.89821.11241.06731.22461.28161.10551.37141.56251.42911.3263
SGAI 0.92170.87510.87470.87370.9050.86420.86780.89750.93230.9729
LVGI 0.94690.89910.98761.00551.0751.11141.07411.03330.98290.9153
TATA 0.03310.14760.30850.39820.37650.32040.19130.12340.12780.1212
M-score -2.38-1.90-0.99-1.40-1.46-1.61-2.19-1.62-1.44-1.63
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