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GuruFocus has detected 4 Warning Signs with Dollar Tree Inc $DLTR.
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Dollar Tree Inc (NAS:DLTR)
Beneish M-Score
-2.28 (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 -2.28 suggests that the company is not a manipulator.

DLTR' s Beneish M-Score Range Over the Past 10 Years
Min: -6.34   Max: 6.59
Current: -2.28

-6.34
6.59

During the past 13 years, the highest Beneish M-Score of Dollar Tree Inc was 6.59. The lowest was -6.34. And the median was -2.73.


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 * 1+0.528 * 1.0194+0.404 * 1.0018+0.892 * 1.6218+0.115 * 0.6103
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9695+4.679 * -0.0759-0.327 * 0.8987
=-2.28

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

This Year (Oct16) TTM:Last Year (Oct15) TTM:
Accounts Receivable was $0 Mil.
Revenue was 5001.6 + 4996.3 + 5085.8 + 5365.3 = $20,449 Mil.
Gross Profit was 1520.5 + 1512.4 + 1554.6 + 1652.6 = $6,240 Mil.
Total Current Assets was $4,342 Mil.
Total Assets was $16,195 Mil.
Property, Plant and Equipment(Net PPE) was $3,176 Mil.
Depreciation, Depletion and Amortization(DDA) was $657 Mil.
Selling, General & Admin. Expense(SGA) was $4,652 Mil.
Total Current Liabilities was $2,134 Mil.
Long-Term Debt was $6,938 Mil.
Net Income was 171.6 + 170.2 + 232.7 + 229 = $804 Mil.
Non Operating Income was -224.3 + -174.6 + 0.2 + 966.7 = $568 Mil.
Cash Flow from Operations was -25 + 369.3 + 311 + 809.9 = $1,465 Mil.
Accounts Receivable was $0 Mil.
Revenue was 4945.2 + 3011.2 + 2176.7 + 2475.6 = $12,609 Mil.
Gross Profit was 1400 + 855.2 + 748.9 + 918.1 = $3,922 Mil.
Total Current Assets was $4,628 Mil.
Total Assets was $16,699 Mil.
Property, Plant and Equipment(Net PPE) was $3,141 Mil.
Depreciation, Depletion and Amortization(DDA) was $367 Mil.
Selling, General & Admin. Expense(SGA) was $2,959 Mil.
Total Current Liabilities was $2,161 Mil.
Long-Term Debt was $8,248 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)
=(0 / 20449) / (0 / 12608.7)
=0 / 0
=1

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)
=(3922.2 / 12608.7) / (6240.1 / 20449)
=0.31107093 / 0.30515429
=1.0194

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 - (4342.4 + 3176.3) / 16195) / (1 - (4628 + 3141) / 16699)
=0.53573943 / 0.53476256
=1.0018

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
=20449 / 12608.7
=1.6218

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))
=(366.9 / (366.9 + 3141)) / (656.9 / (656.9 + 3176.3))
=0.10459249 / 0.17137118
=0.6103

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)
=(4652 / 20449) / (2958.7 / 12608.7)
=0.22749279 / 0.23465544
=0.9695

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)
=((6938 + 2134.2) / 16195) / ((8248 + 2161.2) / 16699)
=0.56018524 / 0.62334272
=0.8987

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
=(803.5 - 568 - 1465.2) / 16195
=-0.0759

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 -2.28 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

Jan07Jan08Jan09Jan10Jan11Jan12Jan13Jan14Jan15Jan16
DSRI 1111111117.8059
GMI 1.01030.99281.00470.96571.00020.98940.99991.00821.00891.1739
AQI 1.09971.35070.86750.95111.09130.98150.9150.93530.76236.7513
SGI 1.16961.06881.09481.12621.12451.12721.11521.06031.09721.8017
DEPI 0.94071.03080.95141.02481.02061.071.07371.04051.02021.0772
SGAI 1.00631.01110.99060.97310.96450.97150.97330.99040.99871.0041
LVGI 1.12491.07530.88350.9781.03731.08520.95021.53550.84921.3276
TATA -0.1173-0.0929-0.0853-0.1138-0.0533-0.0852-0.0418-0.071-0.0921-0.0312
M-score -2.88-2.74-2.81-2.92-2.59-2.79-2.58-2.95-2.866.67

Dollar Tree Inc Quarterly Data

Jul14Oct14Jan15Apr15Jul15Oct15Jan16Apr16Jul16Oct16
DSRI 1111117.8059111
GMI 1.01591.01941.00881.00951.06021.13081.17391.18481.10891.0194
AQI 0.94341.10460.76230.27745.36054.76186.751319.21910.99361.0018
SGI 1.06041.0651.09721.10081.19721.50791.80172.09692.08971.6218
DEPI 0.98991.00441.02021.03082.06011.38231.07720.9110.40840.6103
SGAI 0.99410.99370.99881.00721.01311.01331.00410.98560.97260.9695
LVGI 1.52390.78350.84921.62521.28251.2931.32760.70920.9160.8987
TATA -0.0778-0.057-0.0873-0.03020.01850.0287-0.0466-0.0458-0.0837-0.0759
M-score -2.98-2.56-2.84-3.02-0.40-0.366.595.83-1.88-2.28
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