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DR Horton Inc (NYSE:DHI)
Beneish M-Score
-1.66 (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 -1.66 signals that the company is a manipulator.

DHI' s 10-Year Beneish M-Score Range
Min: -8.84   Max: -1.01
Current: -1.66

-8.84
-1.01

During the past 13 years, the highest Beneish M-Score of DR Horton Inc was -1.01. The lowest was -8.84. And the median was -1.76.


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 * 1.0263+0.404 * 0.9507+0.892 * 1.2821+0.115 * 1.0379
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9825+4.679 * 0.1158-0.327 * 0.9202
=-1.66

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

This Year (Sep14) TTM:Last Year (Sep13) TTM:
Accounts Receivable was $0 Mil.
Revenue was 2472.4 + 2147 + 1735 + 1670.6 = $8,025 Mil.
Gross Profit was 522.7 + 421.5 + 415.2 + 397 = $1,756 Mil.
Total Current Assets was $8,372 Mil.
Total Assets was $10,203 Mil.
Property, Plant and Equipment(Net PPE) was $194 Mil.
Depreciation, Depletion and Amortization(DDA) was $38 Mil.
Selling, General & Admin. Expense(SGA) was $966 Mil.
Total Current Liabilities was $1,400 Mil.
Long-Term Debt was $3,683 Mil.
Net Income was 166.2 + 113.1 + 131 + 123.2 = $534 Mil.
Non Operating Income was 3.9 + 3.1 + 2.8 + 3.3 = $13 Mil.
Cash Flow from Operations was -86.3 + -308.2 + -259.4 + -7.5 = $-661 Mil.
Accounts Receivable was $0 Mil.
Revenue was 1859.9 + 1692.8 + 1431.6 + 1275.1 = $6,259 Mil.
Gross Profit was 413.4 + 397.4 + 322.4 + 272.8 = $1,406 Mil.
Total Current Assets was $7,253 Mil.
Total Assets was $8,856 Mil.
Property, Plant and Equipment(Net PPE) was $110 Mil.
Depreciation, Depletion and Amortization(DDA) was $23 Mil.
Selling, General & Admin. Expense(SGA) was $767 Mil.
Total Current Liabilities was $2,048 Mil.
Long-Term Debt was $2,747 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 / 8025) / (0 / 6259.4)
=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)
=(421.5 / 6259.4) / (522.7 / 8025)
=0.22462217 / 0.21886604
=1.0263

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 - (8372.3 + 193.7) / 10202.5) / (1 - (7252.6 + 109.5) / 8856.4)
=0.16040186 / 0.16872544
=0.9507

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
=8025 / 6259.4
=1.2821

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))
=(22.7 / (22.7 + 109.5)) / (38.4 / (38.4 + 193.7))
=0.17170953 / 0.16544593
=1.0379

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)
=(965.5 / 8025) / (766.5 / 6259.4)
=0.12031153 / 0.12245583
=0.9825

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)
=((3682.8 + 1400) / 10202.5) / ((2746.7 + 2048.3) / 8856.4)
=0.49819162 / 0.54141638
=0.9202

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
=(533.5 - 13.1 - -661.4) / 10202.5
=0.1158

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 -1.66 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

Sep05Sep06Sep07Sep08Sep09Sep10Sep11Sep12Sep13Sep14
DSRI 111110.04540.93770.9701
GMI 0.90211.13313.0915-0.2918-7.5710.18511.04080.85250.88111.0262
AQI 1.10040.7650.93651.28650.52961.17231.11860.86791.37180.9507
SGI 1.27881.08570.75050.58830.55031.2030.82651.19721.43761.2821
DEPI 1.08341.08770.86630.82571.45131.31980.90821.24841.19791.0379
SGAI 0.9951.11191.04041.17041.22460.8371.13360.90470.86790.9826
LVGI 1.02731.00370.91591.23071.05710.84050.91410.98761.07410.9202
TATA 0.16620.164-0.179-0.585-0.2503-0.07820.01060.17240.18940.1158
M-score -1.46-1.67-2.46-6.28-8.77-3.79-2.58-1.61-2.01-1.66

DR Horton Inc Quarterly Data

Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14
DSRI 0.78060.9700001111
GMI 0.88210.85260.84960.85810.85650.88090.88840.90580.99051.0263
AQI 0.80520.86790.84180.87421.03851.37180.7691.30290.8940.9507
SGI 1.18041.19721.25761.30961.39351.43761.40921.341.29231.2821
DEPI 1.11241.24841.44091.5041.28681.19791.32791.21781.13951.0379
SGAI 0.87740.87680.87360.90490.86410.86790.89760.93240.9730.9825
LVGI 0.89910.98761.00551.0751.11141.07411.03330.98290.91530.9202
TATA 0.14760.17240.2640.25670.20140.18940.12150.1260.11950.1158
M-score -1.90-1.60-2.01-2.00-2.15-2.01-1.65-1.47-1.66-1.66
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