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GuruFocus has detected 3 Warning Signs with Dollar Tree Inc $DLTR.
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Dollar Tree Inc (NAS:DLTR)
Beneish M-Score
-2.77 (As of Today)

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.

Dollar Tree Inc has a M-score of -2.77 suggests that the company is not a manipulator.

DLTR' s Beneish M-Score Range Over the Past 10 Years
Min: -6.26   Max: 6.59
Current: -2.77

-6.26
6.59

During the past 13 years, the highest Beneish M-Score of Dollar Tree Inc was 6.59. The lowest was -6.26. And the median was -2.76.


Definition

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 Dollar Tree 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 * 0.6668+0.528 * 0.9735+0.404 * 0.9907+0.892 * 1.3369+0.115 * 0.7945
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9726+4.679 * -0.0606-0.327 * 0.8979
=-2.77

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

This Year (Jan17) TTM:Last Year (Jan16) TTM:
Accounts Receivable was $138 Mil.
Revenue was 5635.5 + 5001.6 + 4996.3 + 5085.8 = $20,719 Mil.
Gross Profit was 1807.3 + 1520.5 + 1512.4 + 1554.6 = $6,395 Mil.
Total Current Assets was $3,938 Mil.
Total Assets was $15,702 Mil.
Property, Plant and Equipment(Net PPE) was $3,116 Mil.
Depreciation, Depletion and Amortization(DDA) was $638 Mil.
Selling, General & Admin. Expense(SGA) was $4,690 Mil.
Total Current Liabilities was $2,106 Mil.
Long-Term Debt was $6,170 Mil.
Net Income was 321.8 + 171.6 + 170.2 + 232.7 = $896 Mil.
Non Operating Income was 573.4 + -224.3 + -174.6 + 0.2 = $175 Mil.
Cash Flow from Operations was 1018 + -25 + 369.3 + 311 = $1,673 Mil.
Accounts Receivable was $155 Mil.
Revenue was 5365.3 + 4945.2 + 3011.2 + 2176.7 = $15,498 Mil.
Gross Profit was 1652.6 + 1400 + 855.2 + 748.9 = $4,657 Mil.
Total Current Assets was $3,936 Mil.
Total Assets was $15,901 Mil.
Property, Plant and Equipment(Net PPE) was $3,126 Mil.
Depreciation, Depletion and Amortization(DDA) was $488 Mil.
Selling, General & Admin. Expense(SGA) was $3,607 Mil.
Total Current Liabilities was $2,095 Mil.
Long-Term Debt was $7,238 Mil.



1. DSRI = Days Sales in Receivables Index

Measured as the ratio of days’ sales in receivables in year t to year t-1.

A large increase in DSR could be indicative of revenue inflation.

DSRI=(Receivables_t / Revenue_t) / (Receivables_t-1 / Revenue_t-1)
=(137.9 / 20719.2) / (154.7 / 15498.4)
=0.00665566 / 0.00998168
=0.6668

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.

GMI=GrossMargin_t-1 / GrossMargin_t
=(GrossProfit_t-1 / Revenue_t-1) / (GrossProfit_t / Revenue_t)
=(4656.7 / 15498.4) / (6394.8 / 20719.2)
=0.30046327 / 0.30864126
=0.9735

3. AQI = Asset Quality Index

AQI is the ratio of asset quality in year t to year t-1.

Asset quality is measured as the ratio of non-current assets other than plant, property and equipment to total assets.

AQI=(1 - (CurrentAssets_t + PPE_t) / TotalAssets_t) / (1 - (CurrentAssets_t-1 + PPE_t-1) / TotalAssets_t-1)
=(1 - (3938 + 3115.8) / 15701.6) / (1 - (3935.9 + 3125.5) / 15901.2)
=0.55075916 / 0.55592031
=0.9907

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.

SGI=Sales_t / Sales_t-1
=Revenue_t / Revenue_t-1
=20719.2 / 15498.4
=1.3369

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))
=(487.6 / (487.6 + 3125.5)) / (637.5 / (637.5 + 3115.8))
=0.13495336 / 0.16985053
=0.7945

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)
=(4690 / 20719.2) / (3607 / 15498.4)
=0.22636009 / 0.2327337
=0.9726

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)
=((6169.7 + 2105.9) / 15701.6) / ((7238.4 + 2095.4) / 15901.2)
=0.52705457 / 0.58698715
=0.8979

8. TATA = Total Accruals to Total Assets

Total accruals calculated as the change in working capital accounts other than cash less depreciation.

TATA=(IncomefromContinuingOperations_t - CashFlowsfromOperations_t) / TotalAssets_t
=(NetIncome_t - NonOperatingIncome_t - CashFlowsfromOperations_t) / TotalAssets_t
=(896.3 - 174.7 - 1673.3) / 15701.6
=-0.0606

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.

Dollar Tree Inc has a M-score of -2.77 suggests that the company will not be a manipulator.


Related Terms

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


Historical Data

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

Dollar Tree Inc Annual Data

Jan08Jan09Jan10Jan11Jan12Jan13Jan14Jan15Jan16Jan17
DSRI 111111117.80590.6668
GMI 0.99281.00470.96571.00020.98940.99991.00821.00891.17390.9735
AQI 1.35070.86750.95111.09130.98150.9150.93530.76236.75130.9907
SGI 1.06881.09481.12621.12451.12721.11521.06031.09721.80171.3369
DEPI 1.03080.95141.02481.02061.071.07371.04051.02021.07720.7945
SGAI 1.01110.99060.97310.96450.97150.97330.99040.99871.00410.9726
LVGI 1.07530.88350.9781.03731.08520.95021.53550.84921.32760.8979
TATA -0.0929-0.0853-0.1138-0.0533-0.0852-0.0418-0.071-0.0967-0.0326-0.0495
M-score -2.74-2.81-2.92-2.59-2.79-2.58-2.95-2.896.66-2.72

Dollar Tree Inc Quarterly Data

Oct14Jan15Apr15Jul15Oct15Jan16Apr16Jul16Oct16Jan17
DSRI 111117.80591110.6668
GMI 1.01941.00881.00951.06021.13081.17391.18481.10891.01940.9735
AQI 1.10460.76230.27745.1154.76186.751319.21910.99361.00180.9907
SGI 1.0651.09721.10081.19721.50791.80172.09692.08971.62181.3369
DEPI 1.00441.02021.03082.06011.38231.07720.9110.40840.61030.7945
SGAI 0.99370.99881.00721.01311.01331.00410.98560.97260.96950.9726
LVGI 0.78350.84921.62521.27531.2931.32760.70920.9160.89870.8979
TATA -0.062-0.0967-0.03320.01750.0278-0.048-0.0472-0.085-0.0773-0.0606
M-score -2.59-2.89-3.03-0.50-0.366.595.82-1.89-2.28-2.77
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