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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.
Dick's Sporting Goods, Inc. has a M-score of -2.36 suggests that the company is not a manipulator.
During the past 13 years, the highest Beneish M-Score of Dick's Sporting Goods, Inc. was 0.28. The lowest was -3.32. And the median was -2.60.
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 * 1.2693||+||0.528 * 1.0061||+||0.404 * 0.7635||+||0.892 * 1.0646||+||0.115 * 1.0368|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0063||+||4.679 * -0.0256||-||0.327 * 0.9407|
|This Year (Jan14) TTM:||Last Year (Jan13) TTM:|
|Accounts Receivable was $68 Mil.|
Revenue was 1947.418 + 1400.623 + 1531.431 + 1333.701 = $6,213 Mil.
Gross Profit was 628.067 + 424.899 + 479.33 + 411.654 = $1,944 Mil.
Total Current Assets was $1,620 Mil.
Total Assets was $3,071 Mil.
Property, Plant and Equipment(Net PPE) was $1,085 Mil.
Depreciation, Depletion and Amortization(DDA) was $155 Mil.
Selling, General & Admin. Expense(SGA) was $1,407 Mil.
Total Current Liabilities was $1,003 Mil.
Long-Term Debt was $6 Mil.
Net Income was 138.637 + 49.977 + 84.163 + 64.821 = $338 Mil.
Non Operating Income was 1.549 + 2.735 + 1.735 + 6.204 = $12 Mil.
Cash Flow from Operations was 461.573 + -63.109 + 80.758 + -75.352 = $404 Mil.
|Accounts Receivable was $50 Mil.
Revenue was 1805.301 + 1312.072 + 1437.041 + 1281.704 = $5,836 Mil.
Gross Profit was 588.651 + 406.124 + 447.78 + 394.607 = $1,837 Mil.
Total Current Assets was $1,596 Mil.
Total Assets was $2,888 Mil.
Property, Plant and Equipment(Net PPE) was $840 Mil.
Depreciation, Depletion and Amortization(DDA) was $125 Mil.
Selling, General & Admin. Expense(SGA) was $1,313 Mil.
Total Current Liabilities was $1,001 Mil.
Long-Term Debt was $8 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)|
|=||(68.054 / 6213.173)||/||(50.362 / 5836.118)|
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)|
|=||(424.899 / 5836.118)||/||(628.067 / 6213.173)|
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 - (1620.071 + 1084.529) / 3071.487)||/||(1 - (1595.889 + 840.135) / 2887.807)|
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))|
|=||(125.096 / (125.096 + 840.135))||/||(154.928 / (154.928 + 1084.529))|
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)|
|=||(1407.138 / 6213.173)||/||(1313.49 / 5836.118)|
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)|
|=||((6.476 + 1002.587) / 3071.487)||/||((7.762 + 1000.768) / 2887.807)|
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|
|=||(337.598 - 12.223||-||403.87)||/||3071.487|
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 -2.36 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