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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 Dick's Sporting Goods Inc was -0.19. The lowest was -3.73. And the median was -2.58.
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 Dick's Sporting Goods 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 * 1.1772||+||0.528 * 1.0145||+||0.404 * 1.0705||+||0.892 * 1.0678||+||0.115 * 0.9997|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.037||+||4.679 * -0.0896||-||0.327 * 0.9528|
|This Year (Oct16) TTM:||Last Year (Oct15) TTM:|
|Accounts Receivable was $121 Mil.|
Revenue was 1810.347 + 1967.857 + 1660.343 + 2240.051 = $7,679 Mil.
Gross Profit was 552.843 + 597.378 + 495.797 + 671.966 = $2,318 Mil.
Total Current Assets was $2,444 Mil.
Total Assets was $4,382 Mil.
Property, Plant and Equipment(Net PPE) was $1,492 Mil.
Depreciation, Depletion and Amortization(DDA) was $206 Mil.
Selling, General & Admin. Expense(SGA) was $1,799 Mil.
Total Current Liabilities was $1,554 Mil.
Long-Term Debt was $266 Mil.
Net Income was 48.914 + 91.417 + 56.877 + 128.992 = $326 Mil.
Non Operating Income was 3.778 + 1.93 + 2.067 + -1.117 = $7 Mil.
Cash Flow from Operations was -38.467 + 223.064 + -0.135 + 527.645 = $712 Mil.
|Accounts Receivable was $96 Mil.
Revenue was 1642.627 + 1822.979 + 1565.308 + 2160.006 = $7,191 Mil.
Gross Profit was 488.376 + 553.558 + 468.988 + 691.256 = $2,202 Mil.
Total Current Assets was $2,332 Mil.
Total Assets was $4,058 Mil.
Property, Plant and Equipment(Net PPE) was $1,341 Mil.
Depreciation, Depletion and Amortization(DDA) was $185 Mil.
Selling, General & Admin. Expense(SGA) was $1,624 Mil.
Total Current Liabilities was $1,421 Mil.
Long-Term Debt was $348 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)|
|=||(121.189 / 7678.598)||/||(96.406 / 7190.92)|
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)|
|=||(2202.178 / 7190.92)||/||(2317.984 / 7678.598)|
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 - (2444.105 + 1492.274) / 4382.206)||/||(1 - (2331.573 + 1341.166) / 4058.427)|
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))|
|=||(185.114 / (185.114 + 1341.166))||/||(206.042 / (206.042 + 1492.274))|
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)|
|=||(1798.553 / 7678.598)||/||(1624.298 / 7190.92)|
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)|
|=||((265.761 + 1554.34) / 4382.206)||/||((347.877 + 1421.193) / 4058.427)|
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|
|=||(326.2 - 6.658||-||712.107)||/||4382.206|
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.
Dick's Sporting Goods Inc has a M-score of -2.63 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
Dick's Sporting Goods Inc Annual Data
Dick's Sporting Goods Inc Quarterly Data