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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 Dollar Tree Inc was 6.59. The lowest was -6.26. And the median was -2.76.
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|
* 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
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)|
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)|
|=||(4656.7 / 15498.4)||/||(6394.8 / 20719.2)|
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 - (3938 + 3115.8) / 15701.6)||/||(1 - (3935.9 + 3125.5) / 15901.2)|
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))|
|=||(487.6 / (487.6 + 3125.5))||/||(637.5 / (637.5 + 3115.8))|
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)|
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)|
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|
|=||(896.3 - 174.7||-||1673.3)||/||15701.6|
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.
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