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DR Horton Inc (NYSE:DHI)
Beneish M-Score
-1.65 (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 -1.65 signals that the company is a manipulator.

DHI' s 10-Year Beneish M-Score Range
Min: -8.84   Max: 0.04
Current: -1.65

-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 -1.83.


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 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 * 0.8884+0.404 * 0.769+0.892 * 1.4092+0.115 * 1.3279
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.8976+4.679 * 0.1231-0.327 * 1.0333
=-1.65

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

This Year (Dec13) TTM:Last Year (Dec12) TTM:
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.
Net Income was 123.2 + 139.5 + 146 + 111 = $520 Mil.
Non Operating Income was 3.3 + 0 + 0 + 0 = $3 Mil.
Cash Flow from Operations was -7.5 + -94.8 + -296 + -183.8 = $-582 Mil.
Accounts Receivable was $0 Mil.
Revenue was 1275.1 + 1336.2 + 1150 + 961.2 = $4,723 Mil.
Gross Profit was 272.8 + 269.8 + 232.1 + 190 = $965 Mil.
Total Current Assets was $6,417 Mil.
Total Assets was $7,347 Mil.
Property, Plant and Equipment(Net PPE) was $82 Mil.
Depreciation, Depletion and Amortization(DDA) was $19 Mil.
Selling, General & Admin. Expense(SGA) was $643 Mil.
Total Current Liabilities was $1,141 Mil.
Long-Term Debt was $2,594 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 / 6654.9) / (0 / 4722.5)
=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)
=(413.4 / 4722.5) / (397 / 6654.9)
=0.2042774 / 0.22993584
=0.8884

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 - (7975.8 + 158.7) / 8927.2) / (1 - (6417 + 81.9) / 7347.3)
=0.08879604 / 0.11547099
=0.769

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
=6654.9 / 4722.5
=1.4092

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))
=(18.6 / (18.6 + 81.9)) / (25.7 / (25.7 + 158.7))
=0.18507463 / 0.13937093
=1.3279

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)
=(813.2 / 6654.9) / (642.9 / 4722.5)
=0.12219568 / 0.13613552
=0.8976

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)
=((3461.9 + 1226.4) / 8927.2) / ((2593.7 + 1140.5) / 7347.3)
=0.52517027 / 0.50824112
=1.0333

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
=(519.7 - 3.3 - -582.1) / 8927.2
=0.1231

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 -1.65 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 0.15240.16620.164-0.179-0.585-0.2503-0.07820.01060.17240.1913
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

Sep11Dec11Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13
DSRI 0.93770.93670.90480.78060.9700001
GMI 1.04080.98360.90560.88210.85260.84960.85810.85650.88090.8884
AQI 1.11861.12611.1150.80520.86790.84180.87421.03850.87340.769
SGI 0.82650.92581.01831.18041.19721.25761.30961.39351.43761.4092
DEPI 0.90820.88010.89821.11241.24841.44091.5041.28681.17251.3279
SGAI 1.14161.02930.92170.87510.87460.87360.90490.86410.86790.8976
LVGI 0.91410.9230.94690.89910.98761.00551.0751.11141.07411.0333
TATA 0.00880.02730.03310.14760.17240.2640.25710.20220.19090.1231
M-score -2.59-2.43-2.38-1.90-1.60-2.01-2.00-2.14-2.21-1.65
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