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GuruFocus has detected 5 Warning Signs with Denbury Resources Inc $DNR.
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Denbury Resources Inc (NYSE:DNR)
Beneish M-Score
-2.88 (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.

Denbury Resources Inc has a M-score of -2.88 suggests that the company is not a manipulator.

DNR' s Beneish M-Score Range Over the Past 10 Years
Min: -8.75   Max: 1.14
Current: -2.88

-8.75
1.14

During the past 13 years, the highest Beneish M-Score of Denbury Resources Inc was 1.14. The lowest was -8.75. And the median was -2.88.


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 Denbury Resources 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 * 1.3299+0.528 * 1.0589+0.404 * 0.8687+0.892 * 0.7758+0.115 * 0.5143
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9798+4.679 * -0.073-0.327 * 1.2723
=-2.88

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

This Year (Dec16) TTM:Last Year (Dec15) TTM:
Accounts Receivable was $145.0 Mil.
Revenue was 271.619 + 253.985 + 255.148 + 194.844 = $975.6 Mil.
Gross Profit was 148.026 + 132.15 + 141.059 + 78.596 = $499.8 Mil.
Total Current Assets was $181.1 Mil.
Total Assets was $4,274.6 Mil.
Property, Plant and Equipment(Net PPE) was $3,988.4 Mil.
Depreciation, Depletion and Amortization(DDA) was $846.0 Mil.
Selling, General & Admin. Expense(SGA) was $123.5 Mil.
Total Current Liabilities was $433.5 Mil.
Long-Term Debt was $2,909.7 Mil.
Net Income was -385.726 + -24.59 + -380.668 + -185.193 = $-976.2 Mil.
Non Operating Income was -53.472 + -41.74 + -601.877 + -186.148 = $-883.2 Mil.
Cash Flow from Operations was 59.864 + 96.415 + 60.915 + 2.029 = $219.2 Mil.
Accounts Receivable was $140.6 Mil.
Revenue was 269.617 + 303.6 + 376.694 + 307.649 = $1,257.6 Mil.
Gross Profit was 124.694 + 174.223 + 229.364 + 153.933 = $682.2 Mil.
Total Current Assets was $343.2 Mil.
Total Assets was $5,885.5 Mil.
Property, Plant and Equipment(Net PPE) was $5,375.8 Mil.
Depreciation, Depletion and Amortization(DDA) was $531.7 Mil.
Selling, General & Admin. Expense(SGA) was $162.5 Mil.
Total Current Liabilities was $373.0 Mil.
Long-Term Debt was $3,245.1 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)
=(145.02 / 975.596) / (140.559 / 1257.56)
=0.1486476 / 0.11177121
=1.3299

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)
=(682.214 / 1257.56) / (499.831 / 975.596)
=0.54249022 / 0.512334
=1.0589

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 - (181.126 + 3988.374) / 4274.578) / (1 - (343.169 + 5375.809) / 5885.533)
=0.02458208 / 0.02829905
=0.8687

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
=975.596 / 1257.56
=0.7758

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))
=(531.66 / (531.66 + 5375.809)) / (846.043 / (846.043 + 3988.374))
=0.08999793 / 0.17500414
=0.5143

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)
=(123.514 / 975.596) / (162.495 / 1257.56)
=0.12660364 / 0.12921451
=0.9798

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)
=((2909.732 + 433.496) / 4274.578) / ((3245.114 + 373.015) / 5885.533)
=0.78211884 / 0.61474959
=1.2723

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
=(-976.177 - -883.237 - 219.223) / 4274.578
=-0.073

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.

Denbury Resources Inc has a M-score of -2.88 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.

Denbury Resources Inc Annual Data

Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15Dec16
DSRI 5.10170.63971.95160.82881.13130.51831.21750.74361.19821.3299
GMI 1.07540.97641.23850.86550.86681.12981.12580.87981.28541.0589
AQI 1.3860.96481.51932.2140.90550.93320.9470.95050.23050.8687
SGI 1.32881.40350.65112.16141.20171.06371.02470.96750.51640.7758
DEPI 0.98121.11.13770.99851.24620.82191.20130.90840.6020.5143
SGAI 1.18221.15021.5810.58480.97240.81650.9841.12711.76790.9802
LVGI 1.02121.0121.15010.83250.98981.02130.99950.98271.87371.2723
TATA -0.1251-0.1181-0.0844-0.056-0.0612-0.0746-0.0698-0.07840.1405-0.0747
M-score 1.16-3.05-2.11-1.32-2.54-3.17-2.51-3.22-2.70-2.89

Denbury Resources Inc Quarterly Data

Sep14Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16Dec16
DSRI 0.93960.74360.50490.84390.79581.19821.18871.02591.21271.3299
GMI 0.90790.88060.84680.93550.95131.32381.34611.3591.39141.0589
AQI 0.95630.95050.95621.12040.22450.23050.24270.23111.21130.8687
SGI 1.00930.96750.81570.69510.5770.51640.54480.56670.66160.7758
DEPI 0.88540.90840.92090.79280.67810.6020.67610.87751.22480.5143
SGAI 1.42431.05591.49151.6771.88131.98721.49591.29361.08320.9798
LVGI 1.02510.98270.91341.01571.48961.87372.00731.87481.35891.2723
TATA -0.061-0.0784-0.0886-0.06590.00620.14050.18150.16940.0724-0.073
M-score -2.97-3.21-3.68-3.33-3.70-2.71-2.44-2.52-2.06-2.88
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