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DR Horton Inc (NYSE:DHI)
Beneish M-Score
-1.67 (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 -1.67 signals that the company is a manipulator.

DHI' s 10-Year Beneish M-Score Range
Min: -8.84   Max: 0.04
Current: -1.67

-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 * 1.0476+0.404 * 1.5391+0.892 * 1.3658+0.115 * 0.8961
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9232+4.679 * 0.0515-0.327 * 0.9957
=-1.67

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

This Year (Jun15) TTM:Last Year (Jun14) TTM:
Accounts Receivable was $0 Mil.
Revenue was 2950.8 + 2398 + 2302.6 + 2472.4 = $10,124 Mil.
Gross Profit was 630.4 + 506 + 488.2 + 522.7 = $2,147 Mil.
Total Current Assets was $8,929 Mil.
Total Assets was $10,864 Mil.
Property, Plant and Equipment(Net PPE) was $249 Mil.
Depreciation, Depletion and Amortization(DDA) was $52 Mil.
Selling, General & Admin. Expense(SGA) was $1,141 Mil.
Total Current Liabilities was $1,411 Mil.
Long-Term Debt was $3,821 Mil.
Net Income was 221.4 + 147.9 + 142.5 + 166.2 = $678 Mil.
Non Operating Income was 3.9 + 4.5 + 5.5 + 3.9 = $18 Mil.
Cash Flow from Operations was 357.4 + -39.8 + -129 + -87.7 = $101 Mil.
Accounts Receivable was $0 Mil.
Revenue was 2147 + 1735 + 1670.6 + 1859.9 = $7,413 Mil.
Gross Profit was 421.5 + 415.2 + 397 + 413.4 = $1,647 Mil.
Total Current Assets was $8,553 Mil.
Total Assets was $9,717 Mil.
Property, Plant and Equipment(Net PPE) was $183 Mil.
Depreciation, Depletion and Amortization(DDA) was $33 Mil.
Selling, General & Admin. Expense(SGA) was $905 Mil.
Total Current Liabilities was $1,255 Mil.
Long-Term Debt was $3,445 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 / 10123.8) / (0 / 7412.5)
=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)
=(506 / 7412.5) / (630.4 / 10123.8)
=0.22220573 / 0.21210415
=1.0476

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 - (8928.5 + 248.8) / 10863.5) / (1 - (8553.3 + 183.4) / 9716.6)
=0.15521701 / 0.10084803
=1.5391

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
=10123.8 / 7412.5
=1.3658

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))
=(33.3 / (33.3 + 183.4)) / (51.5 / (51.5 + 248.8))
=0.15366867 / 0.17149517
=0.8961

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)
=(1141.2 / 10123.8) / (905.1 / 7412.5)
=0.11272447 / 0.12210455
=0.9232

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)
=((3821.1 + 1411.4) / 10863.5) / ((3445.3 + 1255) / 9716.6)
=0.48165877 / 0.48373917
=0.9957

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
=(678 - 17.8 - 100.9) / 10863.5
=0.0515

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 -1.67 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

Mar13Jun13Sep13Dec13Mar14Jun14Sep14Dec14Mar15Jun15
DSRI 0001111111
GMI 0.85810.85650.88090.88840.90580.99051.02631.07741.12151.0476
AQI 0.87421.03851.37180.7691.30290.8940.95071.69811.02411.5391
SGI 1.30961.39351.43761.40921.341.29231.28211.30081.33941.3658
DEPI 1.5041.28681.19791.32791.21781.13951.03790.91870.90770.8961
SGAI 0.90490.86410.86790.89760.93240.9730.98250.97190.96220.9232
LVGI 1.0751.11141.07411.03330.98290.91530.92020.93470.92170.9957
TATA 0.25670.20140.18940.12160.12590.11940.11580.12770.10430.0515
M-score -2.00-2.15-2.01-1.65-1.47-1.66-1.66-1.27-1.59-1.67
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