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GuruFocus has detected 2 Warning Signs with Dick's Sporting Goods Inc $DKS.
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Dick's Sporting Goods Inc (NYSE:DKS)
Beneish M-Score
-2.63 (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.

Dick's Sporting Goods Inc has a M-score of -2.63 suggests that the company is not a manipulator.

DKS' s Beneish M-Score Range Over the Past 10 Years
Min: -3.73   Max: -0.19
Current: -2.63

-3.73
-0.19

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.


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 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
=-2.63

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

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

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)
=(121.189 / 7678.598) / (96.406 / 7190.92)
=0.0157827 / 0.01340663
=1.1772

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)
=(2202.178 / 7190.92) / (2317.984 / 7678.598)
=0.30624426 / 0.30187594
=1.0145

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 - (2444.105 + 1492.274) / 4382.206) / (1 - (2331.573 + 1341.166) / 4058.427)
=0.10173575 / 0.09503386
=1.0705

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
=7678.598 / 7190.92
=1.0678

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))
=0.12128443 / 0.12132136
=0.9997

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)
=0.23422935 / 0.22588181
=1.037

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)
=0.41533899 / 0.43590041
=0.9528

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
=(326.2 - 6.658 - 712.107) / 4382.206
=-0.0896

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.


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 local exchange's currency.

Dick's Sporting Goods Inc Annual Data

Jan07Jan08Jan09Jan10Jan11Jan12Jan13Jan14Jan15Jan16
DSRI 1.13921.25190.87730.57380.89421.02450.80651.64881.20450.7166
GMI 0.97590.96681.03881.03960.92710.9720.97211.00611.02181.02
AQI 0.82761.47520.86960.91620.83480.87111.33930.76350.96150.9755
SGI 1.18641.24861.06221.06841.10391.06991.11981.06461.09681.067
DEPI 1.0640.9210.86421.04140.95281.06521.00551.03680.96331.0332
SGAI 1.0391.01890.99990.97241.05220.95361.00871.00630.99311.0076
LVGI 0.8910.94690.87361.0310.91190.95940.95670.94071.00941.0141
TATA -0.0177-0.053-0.103-0.1194-0.0809-0.0535-0.0415-0.0256-0.0787-0.0879
M-score -2.31-2.10-3.03-3.38-2.95-2.68-2.61-2.02-2.58-3.09

Dick's Sporting Goods Inc Quarterly Data

Jul14Oct14Jan15Apr15Jul15Oct15Jan16Apr16Jul16Oct16
DSRI 1.11190.99371.20450.87460.95561.00640.71661.65191.27471.1772
GMI 1.02251.02351.02181.0251.00711.00081.021.01571.02031.0145
AQI 0.77770.91890.96150.98310.97260.90380.97550.92660.99541.0705
SGI 1.08251.08741.09681.09851.09251.08921.0671.06121.06161.0678
DEPI 1.0290.98260.96330.97631.05641.03981.03321.06261.02430.9997
SGAI 1.00060.99770.99311.00570.98650.99631.00761.01121.02861.037
LVGI 1.0241.09551.00941.04561.01131.03111.01411.01311.04360.9528
TATA -0.071-0.0666-0.0787-0.0844-0.0826-0.0649-0.0879-0.0731-0.0854-0.0896
M-score -2.72-2.77-2.58-2.91-2.83-2.74-3.09-2.19-2.58-2.63
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