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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 -2.69 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 0.27. The lowest was -3.32. And the median was -2.46.
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 * 1.1475||+||0.528 * 1.0225||+||0.404 * 0.7777||+||0.892 * 1.0825||+||0.115 * 1.029|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0006||+||4.679 * -0.071||-||0.327 * 1.024|
|This Year (Jul14) TTM:||Last Year (Jul13) TTM:|
|Accounts Receivable was $109 Mil.|
Revenue was 1688.89 + 1438.908 + 1947.418 + 1400.623 = $6,476 Mil.
Gross Profit was 502.556 + 440.883 + 628.067 + 424.899 = $1,996 Mil.
Total Current Assets was $1,757 Mil.
Total Assets was $3,255 Mil.
Property, Plant and Equipment(Net PPE) was $1,138 Mil.
Depreciation, Depletion and Amortization(DDA) was $168 Mil.
Selling, General & Admin. Expense(SGA) was $1,471 Mil.
Total Current Liabilities was $1,133 Mil.
Long-Term Debt was $6 Mil.
Net Income was 69.467 + 69.984 + 138.637 + 49.977 = $328 Mil.
Non Operating Income was 2.013 + 2.364 + 1.549 + 2.735 = $9 Mil.
Cash Flow from Operations was 138.295 + 13.924 + 461.573 + -63.109 = $551 Mil.
|Accounts Receivable was $87 Mil.
Revenue was 1531.431 + 1333.701 + 1805.301 + 1312.072 = $5,983 Mil.
Gross Profit was 479.33 + 411.654 + 588.651 + 406.124 = $1,886 Mil.
Total Current Assets was $1,653 Mil.
Total Assets was $3,019 Mil.
Property, Plant and Equipment(Net PPE) was $937 Mil.
Depreciation, Depletion and Amortization(DDA) was $143 Mil.
Selling, General & Admin. Expense(SGA) was $1,358 Mil.
Total Current Liabilities was $1,025 Mil.
Long-Term Debt was $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)|
|=||(108.576 / 6475.839)||/||(87.411 / 5982.505)|
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)|
|=||(440.883 / 5982.505)||/||(502.556 / 6475.839)|
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 - (1757.16 + 1138.182) / 3255.483)||/||(1 - (1652.675 + 937.31) / 3019.471)|
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))|
|=||(143.31 / (143.31 + 937.31))||/||(168.385 / (168.385 + 1138.182))|
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)|
|=||(1470.655 / 6475.839)||/||(1357.75 / 5982.505)|
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)|
|=||((6.232 + 1132.882) / 3255.483)||/||((6.36 + 1025.451) / 3019.471)|
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|
|=||(328.065 - 8.661||-||550.683)||/||3255.483|
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 -2.69 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