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Diamond Foods Inc (NAS:DMND)
Beneish M-Score
-2.33 (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 -2.33 suggests that the company is not a manipulator.

DMND' s 10-Year Beneish M-Score Range
Min: -3.48   Max: -0.89
Current: -2.33

-3.48
-0.89

During the past 13 years, the highest Beneish M-Score of Diamond Foods Inc was -0.89. The lowest was -3.48. And the median was -2.35.


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 * 0.9812+0.528 * 0.9883+0.404 * 0.9926+0.892 * 1.0014+0.115 * 1.049
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.7616+4.679 * 0.0172-0.327 * 0.8651
=-2.33

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

This Year (Jul14) TTM:Last Year (Jul13) TTM:
Accounts Receivable was $95.5 Mil.
Revenue was 219.07 + 190.892 + 220.577 + 234.668 = $865.2 Mil.
Gross Profit was 49.289 + 45.096 + 55.928 + 57.933 = $208.2 Mil.
Total Current Assets was $243.9 Mil.
Total Assets was $1,192.8 Mil.
Property, Plant and Equipment(Net PPE) was $131.9 Mil.
Depreciation, Depletion and Amortization(DDA) was $31.5 Mil.
Selling, General & Admin. Expense(SGA) was $209.7 Mil.
Total Current Liabilities was $133.5 Mil.
Long-Term Debt was $637.3 Mil.
Net Income was -1.856 + -105.633 + -15.06 + -42.153 = $-164.7 Mil.
Non Operating Income was 0 + -83.004 + 0 + 0 = $-83.0 Mil.
Cash Flow from Operations was -0.341 + -163.682 + 48.926 + 12.837 = $-102.3 Mil.
Accounts Receivable was $97.2 Mil.
Revenue was 199.801 + 184.905 + 220.844 + 258.462 = $864.0 Mil.
Gross Profit was 53.058 + 43.35 + 50.569 + 58.546 = $205.5 Mil.
Total Current Assets was $231.1 Mil.
Total Assets was $1,172.3 Mil.
Property, Plant and Equipment(Net PPE) was $132.2 Mil.
Depreciation, Depletion and Amortization(DDA) was $33.5 Mil.
Selling, General & Admin. Expense(SGA) was $274.9 Mil.
Total Current Liabilities was $290.6 Mil.
Long-Term Debt was $585.1 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)
=(95.505 / 865.207) / (97.202 / 864.012)
=0.11038399 / 0.11250075
=0.9812

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)
=(45.096 / 864.012) / (49.289 / 865.207)
=0.23787054 / 0.24068922
=0.9883

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 - (243.871 + 131.891) / 1192.834) / (1 - (231.105 + 132.225) / 1172.315)
=0.68498383 / 0.69007477
=0.9926

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
=865.207 / 864.012
=1.0014

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))
=(33.525 / (33.525 + 132.225)) / (31.506 / (31.506 + 131.891))
=0.20226244 / 0.19281872
=1.049

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)
=(209.651 / 865.207) / (274.901 / 864.012)
=0.24231311 / 0.31816803
=0.7616

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)
=((637.327 + 133.549) / 1192.834) / ((585.077 + 290.645) / 1172.315)
=0.64625589 / 0.7470023
=0.8651

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
=(-164.702 - -83.004 - -102.26) / 1192.834
=0.0172

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 -2.33 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 own currency.

Diamond Foods Inc Annual Data

Jul05Jul06Jul07Jul08Jul09Jul10Jul11Jul12Jul13Jul14
DSRI 1.08241.05240.93390.89770.6741.6431.0550.85221.29830.9812
GMI 1.48644.03640.91070.90860.69731.00330.91041.41980.76980.9883
AQI 1.03591.48640.94550.84617.08321.52160.97010.97951.02570.9926
SGI 1.19081.11421.09511.0171.07421.19131.42011.0160.88041.0014
DEPI 1.27521.04880.76241.16440.86051.43090.67671.16150.79951.049
SGAI 1.08480.94820.98381.0011.30310.90961.02351.17331.85280.7616
LVGI 0.84670.91750.85390.99381.20951.05590.941.19771.18920.8651
TATA 0.6946-0.1040.0329-0.1145-0.07270.02420.0250.0215-0.1770.0172
M-score 1.35-0.98-2.35-3.18-0.89-1.35-2.02-2.36-3.48-2.33

Diamond Foods Inc Quarterly Data

Apr12Jul12Oct12Jan13Apr13Jul13Oct13Jan14Apr14Jul14
DSRI 0.78140.85220.84150.79950.99151.29831.321.37511.15680.9812
GMI 1.33071.41981.33851.07350.89620.76980.76180.81390.87480.9883
AQI 0.93520.97951.06281.09811.09151.02570.99530.98670.98210.9926
SGI 1.08841.0160.95180.9060.8970.88040.88210.9220.95241.0014
DEPI 1.27941.16150.98590.87370.84130.79950.80740.86690.92931.049
SGAI 1.1361.17331.23251.18841.18821.85281.92581.87231.84830.7616
LVGI 1.13691.19771.07591.03391.01831.18921.21211.26411.05430.8651
TATA -0.01710.0215-0.024-0.0236-0.0018-0.177-0.1863-0.2166-0.10250.0172
M-score -2.57-2.36-2.64-2.84-2.66-3.48-3.54-3.57-3.10-2.33
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