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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 -3.38. And the median was -2.68.
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 * 1.1242||+||0.528 * 1.0053||+||0.404 * 1.1878||+||0.892 * 1.0895||+||0.115 * 0.9433|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0672||+||4.679 * -0.1198||-||0.327 * 1.0273|
|This Year (Jan17) TTM:||Last Year (Jan16) TTM:|
|Accounts Receivable was $75 Mil.|
Revenue was 2483.433 + 1810.347 + 1967.857 + 1660.343 = $7,922 Mil.
Gross Profit was 719.764 + 552.843 + 597.378 + 495.797 = $2,366 Mil.
Total Current Assets was $1,996 Mil.
Total Assets was $4,058 Mil.
Property, Plant and Equipment(Net PPE) was $1,523 Mil.
Depreciation, Depletion and Amortization(DDA) was $234 Mil.
Selling, General & Admin. Expense(SGA) was $1,916 Mil.
Total Current Liabilities was $1,397 Mil.
Long-Term Debt was $5 Mil.
Net Income was 90.188 + 48.914 + 91.417 + 56.877 = $287 Mil.
Non Operating Income was 6.649 + 3.778 + 1.93 + 2.067 = $14 Mil.
Cash Flow from Operations was 574.521 + -38.467 + 223.064 + -0.135 = $759 Mil.
|Accounts Receivable was $61 Mil.
Revenue was 2240.051 + 1642.627 + 1822.979 + 1565.308 = $7,271 Mil.
Gross Profit was 671.966 + 488.376 + 553.558 + 468.988 = $2,183 Mil.
Total Current Assets was $1,813 Mil.
Total Assets was $3,559 Mil.
Property, Plant and Equipment(Net PPE) was $1,348 Mil.
Depreciation, Depletion and Amortization(DDA) was $194 Mil.
Selling, General & Admin. Expense(SGA) was $1,648 Mil.
Total Current Liabilities was $1,192 Mil.
Long-Term Debt was $5 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)|
|=||(75.199 / 7921.98)||/||(61.395 / 7270.965)|
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)|
|=||(2182.888 / 7270.965)||/||(2365.782 / 7921.98)|
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 - (1995.678 + 1522.574) / 4058.296)||/||(1 - (1812.69 + 1347.885) / 3559.336)|
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))|
|=||(193.594 / (193.594 + 1347.885))||/||(233.834 / (233.834 + 1522.574))|
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)|
|=||(1915.93 / 7921.98)||/||(1647.695 / 7270.965)|
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)|
|=||((4.679 + 1397.415) / 4058.296)||/||((5.324 + 1191.675) / 3559.336)|
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|
|=||(287.396 - 14.424||-||758.983)||/||4058.296|
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 -2.79 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