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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 -1.45. The lowest was -4.07. And the median was -2.51.
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 * 1.0912||+||0.528 * 0.9789||+||0.404 * 1.0044||+||0.892 * 0.9308||+||0.115 * 1.0018|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0295||+||4.679 * -0.0022||-||0.327 * 1.0102|
|This Year (Dec16) TTM:||Last Year (Dec15) TTM:|
|Accounts Receivable was $141.4 Mil.|
Revenue was 154.174 + 156.017 + 160.258 + 163.524 = $634.0 Mil.
Gross Profit was 90.935 + 91.684 + 97.375 + 99.424 = $379.4 Mil.
Total Current Assets was $366.1 Mil.
Total Assets was $2,278.6 Mil.
Property, Plant and Equipment(Net PPE) was $205.1 Mil.
Depreciation, Depletion and Amortization(DDA) was $30.6 Mil.
Selling, General & Admin. Expense(SGA) was $148.9 Mil.
Total Current Liabilities was $286.3 Mil.
Long-Term Debt was $1,396.9 Mil.
Net Income was 21.347 + 24.273 + 26.829 + 25.543 = $98.0 Mil.
Non Operating Income was -3.462 + -2.57 + -5.682 + -3.378 = $-15.1 Mil.
Cash Flow from Operations was 56.052 + 8.147 + 16.417 + 37.494 = $118.1 Mil.
|Accounts Receivable was $139.2 Mil.
Revenue was 171.3 + 162.437 + 171.549 + 175.814 = $681.1 Mil.
Gross Profit was 105.228 + 96.685 + 96.807 + 100.286 = $399.0 Mil.
Total Current Assets was $372.7 Mil.
Total Assets was $2,331.9 Mil.
Property, Plant and Equipment(Net PPE) was $219.6 Mil.
Depreciation, Depletion and Amortization(DDA) was $32.8 Mil.
Selling, General & Admin. Expense(SGA) was $155.4 Mil.
Total Current Liabilities was $298.4 Mil.
Long-Term Debt was $1,406.6 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)|
|=||(141.389 / 633.973)||/||(139.206 / 681.1)|
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.
|=||(GrossProfit_t-1 / Revenue_t-1)||/||(GrossProfit_t / Revenue_t)|
|=||(399.006 / 681.1)||/||(379.418 / 633.973)|
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 - (366.148 + 205.055) / 2278.583)||/||(1 - (372.709 + 219.58) / 2331.85)|
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))|
|=||(32.84 / (32.84 + 219.58))||/||(30.606 / (30.606 + 205.055))|
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)|
|=||(148.935 / 633.973)||/||(155.428 / 681.1)|
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)|
|=||((1396.855 + 286.312) / 2278.583)||/||((1406.649 + 298.429) / 2331.85)|
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|
|=||(97.992 - -15.092||-||118.11)||/||2278.583|
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 -2.49 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