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D.R. Horton Inc (NYSE:DHI)
Beneish M-Score
-2.35 (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 -2.35 suggests that the company is not a manipulator.

DHI' s Beneish M-Score Range Over the Past 10 Years
Min: -8.92   Max: 0.04
Current: -2.35

-8.92
0.04

During the past 13 years, the highest Beneish M-Score of D.R. Horton Inc was 0.04. The lowest was -8.92. And the median was -1.83.


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 * 0.9731+0.404 * 0.9906+0.892 * 1.2133+0.115 * 0.5947
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9241+4.679 * -0.0092-0.327 * 0.8974
=-2.35

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

This Year (Mar16) TTM:Last Year (Mar15) TTM:
Accounts Receivable was $0 Mil.
Revenue was 2767.9 + 2416.4 + 3172.4 + 2950.8 = $11,308 Mil.
Gross Profit was 598.6 + 524.2 + 663.6 + 630.4 = $2,417 Mil.
Total Current Assets was $9,452 Mil.
Total Assets was $11,300 Mil.
Property, Plant and Equipment(Net PPE) was $150 Mil.
Depreciation, Depletion and Amortization(DDA) was $56 Mil.
Selling, General & Admin. Expense(SGA) was $1,226 Mil.
Total Current Liabilities was $1,347 Mil.
Long-Term Debt was $3,663 Mil.
Net Income was 195.1 + 157.7 + 238.9 + 221.4 = $813 Mil.
Non Operating Income was 9.6 + 3.4 + 4.5 + 3.9 = $21 Mil.
Cash Flow from Operations was 28.4 + -1.5 + 511.8 + 357.4 = $896 Mil.
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.



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 / 11307.5) / (0 / 9320)
=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)
=(524.2 / 9320) / (598.6 / 11307.5)
=0.20798283 / 0.21373425
=0.9731

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 - (9452.1 + 149.5) / 11300.2) / (1 - (8845 + 242.4) / 10713.1)
=0.15031592 / 0.15174879
=0.9906

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
=11307.5 / 9320
=1.2133

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))
=(47.1 / (47.1 + 242.4)) / (56.3 / (56.3 + 149.5))
=0.1626943 / 0.27356657
=0.5947

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)
=(1225.6 / 11307.5) / (1093.1 / 9320)
=0.10838824 / 0.11728541
=0.9241

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)
=((3662.7 + 1346.8) / 11300.2) / ((3945.5 + 1346.6) / 10713.1)
=0.44331074 / 0.493984
=0.8974

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
=(813.1 - 21.4 - 896.1) / 11300.2
=-0.0092

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 -2.35 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 own currency.

D.R. Horton Inc Annual Data

Sep06Sep07Sep08Sep09Sep10Sep11Sep12Sep13Sep14Sep15
DSRI 11110.04540.93770.97011
GMI 1.13314.1551-0.2014-8.16110.18511.04080.85250.88111.02621.0352
AQI 0.7650.93651.28650.52961.17231.11860.86791.37180.9441.0171
SGI 1.08570.75050.58830.55031.2030.82651.19721.43761.28211.3488
DEPI 1.08770.81550.81931.55381.39040.86211.24841.19791.02490.6135
SGAI 1.11191.04041.17041.22460.82861.12330.92210.8680.98260.9108
LVGI 1.00370.91591.23071.05710.84050.91410.98761.07410.91050.9485
TATA 0.1394-0.1552-0.5925-0.2496-0.07820.00270.17080.19130.1160.0029
M-score -1.79-1.79-6.26-9.07-3.78-2.62-1.62-2.01-1.66-2.14

D.R. Horton Inc Quarterly Data

Dec13Mar14Jun14Sep14Dec14Mar15Jun15Sep15Dec15Mar16
DSRI 1111111111
GMI 0.88840.90580.99051.02631.07741.12151.04761.03531.00440.9731
AQI 0.7691.30290.8940.9441.69811.02411.53911.01710.98790.9906
SGI 1.40921.341.29231.28211.30081.33941.36581.34881.26341.2133
DEPI 1.32791.21781.13951.02490.91870.90770.89610.61350.55590.5947
SGAI 0.89760.93240.9730.98250.97190.96220.92320.91070.92340.9241
LVGI 1.03330.98290.91530.91050.93470.92170.99570.94850.92670.8974
TATA 0.12160.12590.11940.1160.12770.10430.05150.0029-0.007-0.0092
M-score -1.65-1.47-1.66-1.66-1.27-1.59-1.67-2.14-2.29-2.35
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