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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 -1.44 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 * 0.9059+0.404 * 1.3029+0.892 * 1.34+0.115 * 1.4291
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9323+4.679 * 0.1271-0.327 * 0.9829
=-1.44

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

This Year (Mar14) TTM:Last Year (Mar13) TTM:
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.
Net Income was 131 + 123.2 + 139.5 + 146 = $540 Mil.
Non Operating Income was 2.8 + 3.3 + 0 + 0 = $6 Mil.
Cash Flow from Operations was -259.4 + -7.5 + -94.8 + -296 = $-658 Mil.
Accounts Receivable was $0 Mil.
Revenue was 1431.6 + 1275.1 + 1336.2 + 1150 = $5,193 Mil.
Gross Profit was 322.4 + 272.8 + 269.9 + 232.1 = $1,097 Mil.
Total Current Assets was $7,209 Mil.
Total Assets was $8,233 Mil.
Property, Plant and Equipment(Net PPE) was $87 Mil.
Depreciation, Depletion and Amortization(DDA) was $23 Mil.
Selling, General & Admin. Expense(SGA) was $679 Mil.
Total Current Liabilities was $1,216 Mil.
Long-Term Debt was $3,273 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 / 6958.3) / (0 / 5192.9)
=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)
=(397 / 5192.9) / (415.2 / 6958.3)
=0.21128849 / 0.23324663
=0.9059

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 - (7814.8 + 169.1) / 9372.8) / (1 - (7209.1 + 87.1) / 8232.5)
=0.14818411 / 0.11373216
=1.3029

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
=6958.3 / 5192.9
=1.34

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))
=(23.3 / (23.3 + 87.1)) / (29.3 / (29.3 + 169.1))
=0.21105072 / 0.14768145
=1.4291

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)
=(848.2 / 6958.3) / (679 / 5192.9)
=0.12189759 / 0.13075545
=0.9323

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)
=((3862.1 + 1161.1) / 9372.8) / ((3273 + 1215.8) / 8232.5)
=0.53593377 / 0.54525357
=0.9829

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
=(539.7 - 6.1 - -657.7) / 9372.8
=0.1271

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 -1.44 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

Dec11Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14
DSRI 0.93670.90480.78060.97000011
GMI 0.98360.90560.88210.85250.84950.85810.85640.8810.88850.9059
AQI 1.12611.1150.80520.86790.84180.87421.03850.87340.7691.3029
SGI 0.92581.01831.18041.19721.25761.30961.39351.43761.40921.34
DEPI 0.88010.89821.11241.06731.22461.28161.10551.37141.56251.4291
SGAI 1.02930.92170.87510.87470.87370.9050.86420.86780.89750.9323
LVGI 0.9230.94690.89910.98761.00551.0751.11141.07411.03330.9829
TATA 0.02730.03310.14760.30850.39820.37650.32090.19050.12270.1271
M-score -2.43-2.38-1.90-0.99-1.40-1.46-1.61-2.19-1.62-1.44
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