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Beneish M-Score 6.05 higher than -2.22, which implies that it might have manipulated its financial results.
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 Dollar Tree Inc was 6.82. The lowest was -6.34. And the median was -2.73.
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 * 1||+||0.528 * 1.1848||+||0.404 * 19.2191||+||0.892 * 2.0969||+||0.115 * 0.911|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9856||+||4.679 * 0.0023||-||0.327 * 0.7092|
|This Year (Apr16) TTM:||Last Year (Apr15) TTM:|
|Accounts Receivable was $0 Mil.|
Revenue was 5085.8 + 5365.3 + 4945.2 + 3011.2 = $18,408 Mil.
Gross Profit was 1554.6 + 1652.6 + 1400 + 855.2 = $5,462 Mil.
Total Current Assets was $4,172 Mil.
Total Assets was $16,061 Mil.
Property, Plant and Equipment(Net PPE) was $3,153 Mil.
Depreciation, Depletion and Amortization(DDA) was $597 Mil.
Selling, General & Admin. Expense(SGA) was $4,227 Mil.
Total Current Liabilities was $2,049 Mil.
Long-Term Debt was $7,210 Mil.
Net Income was 232.7 + 229 + 81.9 + -98 = $446 Mil.
Non Operating Income was 0.2 + -2.5 + -0.6 + -529.5 = $-532 Mil.
Cash Flow from Operations was 311 + 831.4 + -4.8 + -196.1 = $942 Mil.
|Accounts Receivable was $0 Mil.
Revenue was 2176.7 + 2475.6 + 2095.2 + 2031.1 = $8,779 Mil.
Gross Profit was 748.9 + 918.1 + 725.3 + 694.1 = $3,086 Mil.
Total Current Assets was $9,336 Mil.
Total Assets was $10,869 Mil.
Property, Plant and Equipment(Net PPE) was $1,226 Mil.
Depreciation, Depletion and Amortization(DDA) was $208 Mil.
Selling, General & Admin. Expense(SGA) was $2,045 Mil.
Total Current Liabilities was $1,015 Mil.
Long-Term Debt was $7,820 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)|
|=||(0 / 18407.5)||/||(0 / 8778.6)|
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)|
|=||(3086.4 / 8778.6)||/||(5462.4 / 18407.5)|
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 - (4172.1 + 3153.2) / 16060.9)||/||(1 - (9335.6 + 1226) / 10869.2)|
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))|
|=||(208 / (208 + 1226))||/||(597.1 / (597.1 + 3153.2))|
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)|
|=||(4226.8 / 18407.5)||/||(2045.3 / 8778.6)|
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)|
|=||((7209.8 + 2049.1) / 16060.9)||/||((7819.7 + 1015.2) / 10869.2)|
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|
|=||(445.6 - -532.4||-||941.5)||/||16060.9|
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 6.05 signals that the company is likely to 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
Dollar Tree Inc Annual Data
Dollar Tree Inc Quarterly Data