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DR Horton Inc (NYSE:DHI)
Beneish M-Score
-1.27 (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 -1.27 signals that the company is a manipulator.

DHI' s 10-Year Beneish M-Score Range
Min: -8.84   Max: 0.04
Current: -1.27

-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 -1.76.


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 * 1.0774+0.404 * 1.6981+0.892 * 1.3008+0.115 * 0.9187
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9719+4.679 * 0.1277-0.327 * 0.9347
=-1.27

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

This Year (Dec14) TTM:Last Year (Dec13) TTM:
Accounts Receivable was $0 Mil.
Revenue was 2302.6 + 2472.4 + 2147 + 1735 = $8,657 Mil.
Gross Profit was 488.2 + 522.7 + 421.5 + 415.2 = $1,848 Mil.
Total Current Assets was $8,540 Mil.
Total Assets was $10,339 Mil.
Property, Plant and Equipment(Net PPE) was $240 Mil.
Depreciation, Depletion and Amortization(DDA) was $43 Mil.
Selling, General & Admin. Expense(SGA) was $1,028 Mil.
Total Current Liabilities was $1,348 Mil.
Long-Term Debt was $3,727 Mil.
Net Income was 142.5 + 166.2 + 113.1 + 131 = $553 Mil.
Non Operating Income was 5.5 + 3.9 + 3.1 + 2.8 = $15 Mil.
Cash Flow from Operations was -129 + -86.3 + -308.2 + -259.2 = $-783 Mil.
Accounts Receivable was $0 Mil.
Revenue was 1670.6 + 1859.9 + 1692.8 + 1431.6 = $6,655 Mil.
Gross Profit was 397 + 413.4 + 397.4 + 322.4 = $1,530 Mil.
Total Current Assets was $7,976 Mil.
Total Assets was $8,927 Mil.
Property, Plant and Equipment(Net PPE) was $159 Mil.
Depreciation, Depletion and Amortization(DDA) was $26 Mil.
Selling, General & Admin. Expense(SGA) was $813 Mil.
Total Current Liabilities was $1,226 Mil.
Long-Term Debt was $3,462 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 / 8657) / (0 / 6654.9)
=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)
=(522.7 / 6654.9) / (488.2 / 8657)
=0.22993584 / 0.21342266
=1.0774

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 - (8539.9 + 239.9) / 10338.7) / (1 - (7975.8 + 158.7) / 8927.2)
=0.15078298 / 0.08879604
=1.6981

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
=8657 / 6654.9
=1.3008

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))
=(25.7 / (25.7 + 158.7)) / (42.9 / (42.9 + 239.9))
=0.13937093 / 0.15169731
=0.9187

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)
=(1028.1 / 8657) / (813.2 / 6654.9)
=0.11875939 / 0.12219568
=0.9719

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)
=((3726.8 + 1348.1) / 10338.7) / ((3461.9 + 1226.4) / 8927.2)
=0.49086442 / 0.52517027
=0.9347

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
=(552.8 - 15.3 - -782.7) / 10338.7
=0.1277

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 -1.27 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

Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14Dec14
DSRI 0.97000011111
GMI 0.85260.84960.85810.85650.88090.88840.90580.99051.02631.0774
AQI 0.86790.84180.87421.03851.37180.7691.30290.8940.95071.6981
SGI 1.19721.25761.30961.39351.43761.40921.341.29231.28211.3008
DEPI 1.24841.44091.5041.28681.19791.32791.21781.13951.03790.9187
SGAI 0.87680.87360.90490.86410.86790.89760.93240.9730.98250.9719
LVGI 0.98761.00551.0751.11141.07411.03330.98290.91530.92020.9347
TATA 0.17240.2640.25670.20140.18940.12160.1260.11950.11580.1277
M-score -1.60-2.01-2.00-2.15-2.01-1.65-1.47-1.66-1.66-1.27
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