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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 -0.17. The lowest was -3.38. And the median was -2.65.
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 * 1.2045||+||0.528 * 1.0218||+||0.404 * 0.9317||+||0.892 * 1.0968||+||0.115 * 0.9633|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9931||+||4.679 * -0.0777||-||0.327 * 0.9963|
|This Year (Jan15) TTM:||Last Year (Jan14) TTM:|
|Accounts Receivable was $80 Mil.|
Revenue was 2160.006 + 1526.675 + 1688.89 + 1438.908 = $6,814 Mil.
Gross Profit was 691.256 + 451.972 + 502.556 + 440.883 = $2,087 Mil.
Total Current Assets was $1,850 Mil.
Total Assets was $3,436 Mil.
Property, Plant and Equipment(Net PPE) was $1,203 Mil.
Depreciation, Depletion and Amortization(DDA) was $179 Mil.
Selling, General & Admin. Expense(SGA) was $1,533 Mil.
Total Current Liabilities was $1,119 Mil.
Long-Term Debt was $6 Mil.
Net Income was 155.536 + 49.211 + 69.467 + 69.984 = $344 Mil.
Non Operating Income was 0.307 + 0.486 + 2.013 + 2.364 = $5 Mil.
Cash Flow from Operations was 503.221 + -49.462 + 138.295 + 13.924 = $606 Mil.
|Accounts Receivable was $61 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.
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)|
|=||(80.292 / 6814.479)||/||(60.779 / 6213.173)|
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)|
|=||(451.972 / 6213.173)||/||(691.256 / 6814.479)|
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 - (1850.384 + 1203.382) / 3436.198)||/||(1 - (1620.071 + 1084.529) / 3071.487)|
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))|
|=||(154.928 / (154.928 + 1084.529))||/||(179.431 / (179.431 + 1203.382))|
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)|
|=||(1532.607 / 6814.479)||/||(1407.138 / 6213.173)|
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)|
|=||((5.913 + 1118.833) / 3436.198)||/||((6.476 + 1002.587) / 3071.487)|
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|
|=||(344.198 - 5.17||-||605.978)||/||3436.198|
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 -2.59 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