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Diamond Foods Inc (NAS:DMND)
Beneish M-Score
-2.20 (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.

Diamond Foods Inc has a M-score of -2.20 signals that the company is a manipulator.

DMND' s 10-Year Beneish M-Score Range
Min: -3.56   Max: 0.01
Current: -2.2

-3.56
0.01

During the past 13 years, the highest Beneish M-Score of Diamond Foods Inc was 0.01. The lowest was -3.56. And the median was -2.45.


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 Diamond Foods 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 * 0.8645+0.528 * 1.0201+0.404 * 0.9594+0.892 * 1.044+0.115 * 1.1204
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.5939+4.679 * 0.0524-0.327 * 0.8682
=-2.20

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.

This Year (Oct14) TTM:Last Year (Oct13) TTM:
Accounts Receivable was $119.3 Mil.
Revenue was 246.621 + 219.07 + 190.892 + 220.577 = $877.2 Mil.
Gross Profit was 59.39 + 49.289 + 45.096 + 55.928 = $209.7 Mil.
Total Current Assets was $403.3 Mil.
Total Assets was $1,338.4 Mil.
Property, Plant and Equipment(Net PPE) was $133.0 Mil.
Depreciation, Depletion and Amortization(DDA) was $30.4 Mil.
Selling, General & Admin. Expense(SGA) was $182.8 Mil.
Total Current Liabilities was $287.1 Mil.
Long-Term Debt was $636.3 Mil.
Net Income was 7.694 + -1.856 + -105.633 + -15.06 = $-114.9 Mil.
Non Operating Income was -1.452 + 0 + -83.004 + 0 = $-84.5 Mil.
Cash Flow from Operations was 14.584 + -0.341 + -163.682 + 48.926 = $-100.5 Mil.
Accounts Receivable was $132.2 Mil.
Revenue was 234.668 + 199.801 + 184.905 + 220.844 = $840.2 Mil.
Gross Profit was 57.933 + 53.058 + 43.35 + 50.569 = $204.9 Mil.
Total Current Assets was $362.2 Mil.
Total Assets was $1,307.2 Mil.
Property, Plant and Equipment(Net PPE) was $128.5 Mil.
Depreciation, Depletion and Amortization(DDA) was $33.9 Mil.
Selling, General & Admin. Expense(SGA) was $294.9 Mil.
Total Current Liabilities was $451.6 Mil.
Long-Term Debt was $587.3 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)
=(119.326 / 877.16) / (132.212 / 840.218)
=0.13603675 / 0.1573544
=0.8645

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)
=(49.289 / 840.218) / (59.39 / 877.16)
=0.24387718 / 0.23907041
=1.0201

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 - (403.323 + 132.997) / 1338.411) / (1 - (362.178 + 128.49) / 1307.218)
=0.59928602 / 0.62464715
=0.9594

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
=877.16 / 840.218
=1.044

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))
=(33.893 / (33.893 + 128.49)) / (30.448 / (30.448 + 132.997))
=0.20872259 / 0.18628897
=1.1204

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)
=(182.835 / 877.16) / (294.889 / 840.218)
=0.20843974 / 0.35096725
=0.5939

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)
=((636.289 + 287.099) / 1338.411) / ((587.265 + 451.563) / 1307.218)
=0.68991364 / 0.79468612
=0.8682

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
=(-114.855 - -84.456 - -100.513) / 1338.411
=0.0524

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.

Diamond Foods Inc has a M-score of -2.20 signals that the company is likely to 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 own currency.

Diamond Foods Inc Annual Data

Jul05Jul06Jul07Jul08Jul09Jul10Jul11Jul12Jul13Jul14
DSRI 1.05240.93390.89770.6741.63781.05760.85281.29830.9812
GMI 4.03640.91070.90860.69731.11880.94791.22290.76980.9883
AQI 1.48640.94550.84617.08321.52160.97010.97951.02570.9926
SGI 1.11421.09511.0171.07421.19511.41681.01520.88041.0014
DEPI 1.04880.76241.16440.86051.49630.67231.11790.79951.049
SGAI 0.89241.04531.0011.30310.91621.02371.16461.85280.7616
LVGI 0.91750.85390.99381.20951.05590.941.19771.18920.8651
TATA -0.1040.0329-0.1145-0.07270.0128-0.0311-0.0308-0.17420.0172
M-score -0.97-2.36-3.18-0.89-1.33-2.26-2.72-3.47-2.33

Diamond Foods Inc Quarterly Data

Jul12Oct12Jan13Apr13Jul13Oct13Jan14Apr14Jul14Oct14
DSRI 0.85280.84260.80120.99341.29831.321.37511.15680.98120.8645
GMI 1.22291.19080.99680.85670.76980.76180.81390.87480.98831.0201
AQI 0.97951.06281.09811.09151.02570.99530.98670.98210.99260.9594
SGI 1.01520.95060.90420.89520.88040.88210.9220.95241.00141.044
DEPI 1.11790.92360.79750.80850.79950.81740.88760.92931.0491.1204
SGAI 1.16461.2261.18541.18411.85281.92581.87231.84830.76160.5939
LVGI 1.19771.07591.03391.01831.18921.21211.26411.05430.86510.8682
TATA -0.0308-0.0727-0.0769-0.0566-0.1742-0.1824-0.2125-0.09840.01870.0524
M-score -2.72-2.96-3.14-2.94-3.47-3.52-3.55-3.08-2.33-2.20
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