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DR Horton Inc (NYSE:DHI)
Beneish M-Score
-1.59 (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 -1.59 signals that the company is a manipulator.

DHI' s 10-Year Beneish M-Score Range
Min: -8.84   Max: 0.04
Current: -1.59

-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 -1.70.


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 * 1.1215+0.404 * 1.0241+0.892 * 1.3394+0.115 * 0.9077
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9622+4.679 * 0.1043-0.327 * 0.9217
=-1.59

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

This Year (Mar15) TTM:Last Year (Mar14) TTM:
Accounts Receivable was $0 Mil.
Revenue was 2398 + 2302.6 + 2472.4 + 2147 = $9,320 Mil.
Gross Profit was 506 + 488.2 + 522.7 + 421.5 = $1,938 Mil.
Total Current Assets was $8,845 Mil.
Total Assets was $10,713 Mil.
Property, Plant and Equipment(Net PPE) was $242 Mil.
Depreciation, Depletion and Amortization(DDA) was $47 Mil.
Selling, General & Admin. Expense(SGA) was $1,093 Mil.
Total Current Liabilities was $1,347 Mil.
Long-Term Debt was $3,946 Mil.
Net Income was 147.9 + 142.5 + 166.2 + 113.1 = $570 Mil.
Non Operating Income was 4.5 + 5.5 + 3.9 + 3.1 = $17 Mil.
Cash Flow from Operations was -39.8 + -129 + -86.3 + -309.3 = $-564 Mil.
Accounts Receivable was $0 Mil.
Revenue was 1735 + 1670.6 + 1859.9 + 1692.8 = $6,958 Mil.
Gross Profit was 415.2 + 397 + 413.4 + 397.4 = $1,623 Mil.
Total Current Assets was $7,815 Mil.
Total Assets was $9,373 Mil.
Property, Plant and Equipment(Net PPE) was $169 Mil.
Depreciation, Depletion and Amortization(DDA) was $29 Mil.
Selling, General & Admin. Expense(SGA) was $848 Mil.
Total Current Liabilities was $1,161 Mil.
Long-Term Debt was $3,862 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 / 9320) / (0 / 6958.3)
=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)
=(488.2 / 6958.3) / (506 / 9320)
=0.23324663 / 0.20798283
=1.1215

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 - (8845 + 242.4) / 10713.1) / (1 - (7814.8 + 169.1) / 9372.8)
=0.15174879 / 0.14818411
=1.0241

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
=9320 / 6958.3
=1.3394

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))
=(29.3 / (29.3 + 169.1)) / (47.1 / (47.1 + 242.4))
=0.14768145 / 0.1626943
=0.9077

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)
=(1093.1 / 9320) / (848.2 / 6958.3)
=0.11728541 / 0.12189759
=0.9622

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)
=((3945.5 + 1346.6) / 10713.1) / ((3862.1 + 1161.1) / 9372.8)
=0.493984 / 0.53593377
=0.9217

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
=(569.7 - 17 - -564.4) / 10713.1
=0.1043

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 -1.59 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

Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14Dec14Mar15
DSRI 0000111111
GMI 0.84960.85810.85650.88090.88840.90580.99051.02631.07741.1215
AQI 0.84180.87421.03851.37180.7691.30290.8940.95071.69811.0241
SGI 1.25761.30961.39351.43761.40921.341.29231.28211.30081.3394
DEPI 1.44091.5041.28681.19791.32791.21781.13951.03790.91870.9077
SGAI 0.87360.90490.86410.86790.89760.93240.9730.98250.97190.9622
LVGI 1.00551.0751.11141.07411.03330.98290.91530.92020.93470.9217
TATA 0.2640.25670.20140.18940.12160.12590.11950.11580.12770.1043
M-score -2.01-2.00-2.15-2.01-1.65-1.47-1.66-1.66-1.27-1.59
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