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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 -3.73. And the median was -2.58.
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 * 1.2747||+||0.528 * 1.0203||+||0.404 * 0.9954||+||0.892 * 1.0616||+||0.115 * 1.0243|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0286||+||4.679 * -0.0854||-||0.327 * 1.0436|
|This Year (Jul16) TTM:||Last Year (Jul15) TTM:|
|Accounts Receivable was $144 Mil.|
Revenue was 1967.857 + 1660.343 + 2240.051 + 1642.627 = $7,511 Mil.
Gross Profit was 597.378 + 495.797 + 671.966 + 488.376 = $2,254 Mil.
Total Current Assets was $2,085 Mil.
Total Assets was $3,988 Mil.
Property, Plant and Equipment(Net PPE) was $1,476 Mil.
Depreciation, Depletion and Amortization(DDA) was $200 Mil.
Selling, General & Admin. Expense(SGA) was $1,731 Mil.
Total Current Liabilities was $1,316 Mil.
Long-Term Debt was $157 Mil.
Net Income was 91.417 + 56.877 + 128.992 + 47.215 = $325 Mil.
Non Operating Income was 1.93 + 2.067 + -1.117 + -1.185 = $2 Mil.
Cash Flow from Operations was 223.064 + -0.135 + 527.645 + -87.17 = $663 Mil.
|Accounts Receivable was $107 Mil.
Revenue was 1822.979 + 1565.308 + 2160.006 + 1526.675 = $7,075 Mil.
Gross Profit was 553.558 + 468.988 + 691.256 + 451.972 = $2,166 Mil.
Total Current Assets was $1,950 Mil.
Total Assets was $3,639 Mil.
Property, Plant and Equipment(Net PPE) was $1,297 Mil.
Depreciation, Depletion and Amortization(DDA) was $180 Mil.
Selling, General & Admin. Expense(SGA) was $1,585 Mil.
Total Current Liabilities was $1,282 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)|
|=||(144.458 / 7510.878)||/||(106.753 / 7074.968)|
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)|
|=||(2165.774 / 7074.968)||/||(2253.517 / 7510.878)|
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 - (2084.769 + 1475.797) / 3987.666)||/||(1 - (1950.229 + 1297.302) / 3639.091)|
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))|
|=||(180.256 / (180.256 + 1297.302))||/||(199.529 / (199.529 + 1475.797))|
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)|
|=||(1730.762 / 7510.878)||/||(1585.045 / 7074.968)|
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)|
|=||((157.013 + 1315.611) / 3987.666)||/||((5.627 + 1282.093) / 3639.091)|
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|
|=||(324.501 - 1.695||-||663.404)||/||3987.666|
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 -2.58 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