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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.
During the past 13 years, the highest Beneish M-Score of DineEquity Inc was -0.35. The lowest was -4.77. And the median was -2.54.
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 DineEquity 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 * 0.9596||+||0.528 * 1.0091||+||0.404 * 1.0028||+||0.892 * 1.0397||+||0.115 * 0.9667|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0437||+||4.679 * 0.0162||-||0.327 * 1.0366|
|This Year (Sep15) TTM:||Last Year (Sep14) TTM:|
|Accounts Receivable was $91.1 Mil.|
Revenue was 162.437 + 171.549 + 175.814 + 164.413 = $674.2 Mil.
Gross Profit was 96.685 + 96.807 + 100.286 + 91.941 = $385.7 Mil.
Total Current Assets was $324.2 Mil.
Total Assets was $2,318.3 Mil.
Property, Plant and Equipment(Net PPE) was $226.2 Mil.
Depreciation, Depletion and Amortization(DDA) was $32.6 Mil.
Selling, General & Admin. Expense(SGA) was $153.5 Mil.
Total Current Liabilities was $209.9 Mil.
Long-Term Debt was $1,430.8 Mil.
Net Income was 24.257 + 26.897 + 28.412 + -22.425 = $57.1 Mil.
Non Operating Income was 2.423 + -0.541 + -1.818 + -67.275 = $-67.2 Mil.
Cash Flow from Operations was 22.466 + 6.993 + 41.13 + 16.097 = $86.7 Mil.
|Accounts Receivable was $91.3 Mil.
Revenue was 162.853 + 160.521 + 167.201 + 157.901 = $648.5 Mil.
Gross Profit was 91.629 + 94.473 + 97.072 + 91.199 = $374.4 Mil.
Total Current Assets was $308.6 Mil.
Total Assets was $2,342.8 Mil.
Property, Plant and Equipment(Net PPE) was $252.7 Mil.
Depreciation, Depletion and Amortization(DDA) was $35.1 Mil.
Selling, General & Admin. Expense(SGA) was $141.4 Mil.
Total Current Liabilities was $252.3 Mil.
Long-Term Debt was $1,347.2 Mil.
1. DSRI = Days Sales in Receivables Index
A large increase in DSR could be indicative of revenue inflation.
|DSRI||=||(Receivables_t / Revenue_t)||/||(Receivables_t-1 / Revenue_t-1)|
|=||(91.085 / 674.213)||/||(91.292 / 648.476)|
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.
|=||(GrossProfit_t-1 / Revenue_t-1)||/||(GrossProfit_t / Revenue_t)|
|=||(96.807 / 648.476)||/||(96.685 / 674.213)|
3. AQI = Asset Quality Index
AQI is the ratio of asset quality in year t to year t-1.
|AQI||=||(1 - (CurrentAssets_t + PPE_t) / TotalAssets_t)||/||(1 - (CurrentAssets_t-1 + PPE_t-1) / TotalAssets_t-1)|
|=||(1 - (324.178 + 226.234) / 2318.286)||/||(1 - (308.581 + 252.673) / 2342.758)|
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.
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))|
|=||(35.076 / (35.076 + 252.673))||/||(32.642 / (32.642 + 226.234))|
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)|
|=||(153.458 / 674.213)||/||(141.418 / 648.476)|
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)|
|=||((1430.812 + 209.86) / 2318.286)||/||((1347.156 + 252.265) / 2342.758)|
8. TATA = Total Accruals to Total Assets
Total accruals calculated as the change in working capital accounts other than cash less depreciation.
|=||(NetIncome_t - NonOperatingIncome_t||-||CashFlowsfromOperations_t)||/||TotalAssets_t|
|=||(57.141 - -67.211||-||86.686)||/||2318.286|
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.
DineEquity Inc has a M-score of -2.42 suggests that the company will not be a manipulator.
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
DineEquity Inc Annual Data
DineEquity Inc Quarterly Data