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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 -2.55.
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 * 0.9929||+||0.528 * 1.0133||+||0.404 * 0.9873||+||0.892 * 1.0296||+||0.115 * 0.9371|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9862||+||4.679 * 0.0029||-||0.327 * 1.0372|
|This Year (Mar15) TTM:||Last Year (Mar14) TTM:|
|Accounts Receivable was $93.5 Mil.|
Revenue was 175.814 + 164.413 + 162.853 + 160.521 = $663.6 Mil.
Gross Profit was 100.286 + 91.941 + 91.629 + 94.473 = $378.3 Mil.
Total Current Assets was $356.6 Mil.
Total Assets was $2,377.3 Mil.
Property, Plant and Equipment(Net PPE) was $235.4 Mil.
Depreciation, Depletion and Amortization(DDA) was $33.8 Mil.
Selling, General & Admin. Expense(SGA) was $146.0 Mil.
Total Current Liabilities was $242.5 Mil.
Long-Term Debt was $1,437.1 Mil.
Net Income was 28.412 + -22.425 + 18.887 + 19.167 = $44.0 Mil.
Non Operating Income was -1.818 + -67.275 + 0.012 + -0.513 = $-69.6 Mil.
Cash Flow from Operations was 41.13 + 16.097 + 46.435 + 3.152 = $106.8 Mil.
|Accounts Receivable was $91.5 Mil.
Revenue was 167.201 + 157.901 + 161.283 + 158.114 = $644.5 Mil.
Gross Profit was 97.072 + 91.199 + 93.043 + 91.026 = $372.3 Mil.
Total Current Assets was $298.9 Mil.
Total Assets was $2,355.2 Mil.
Property, Plant and Equipment(Net PPE) was $264.9 Mil.
Depreciation, Depletion and Amortization(DDA) was $35.3 Mil.
Selling, General & Admin. Expense(SGA) was $143.7 Mil.
Total Current Liabilities was $245.8 Mil.
Long-Term Debt was $1,358.6 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)|
|=||(93.532 / 663.601)||/||(91.493 / 644.499)|
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)|
|=||(91.941 / 644.499)||/||(100.286 / 663.601)|
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 - (356.559 + 235.355) / 2377.314)||/||(1 - (298.863 + 264.855) / 2355.247)|
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))|
|=||(35.302 / (35.302 + 264.855))||/||(33.777 / (33.777 + 235.355))|
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)|
|=||(145.955 / 663.601)||/||(143.739 / 644.499)|
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)|
|=||((1437.077 + 242.544) / 2377.314)||/||((1358.628 + 245.774) / 2355.247)|
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|
|=||(44.041 - -69.594||-||106.814)||/||2377.314|
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 -2.46 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