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GuruFocus has detected 3 Warning Signs with Denbury Resources Inc $DNR.
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Denbury Resources Inc (NYSE:DNR)
Beneish M-Score
7.45 (As of Today)

Warning Sign:

Beneish M-Score 7.45 higher than -2.22, which implies that it might have manipulated its financial results.

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 -2.00 signals that the company is a manipulator.

DNR' s Beneish M-Score Range Over the Past 10 Years
Min: -8.75   Max: 7.45
Current: 7.45

-8.75
7.45

During the past 13 years, the highest Beneish M-Score of Denbury Resources Inc was 7.45. The lowest was -8.75. And the median was -2.84.


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 * 1.2127+0.528 * 1.5026+0.404 * 1.2113+0.892 * 0.6616+0.115 * 1.2248
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0832+4.679 * 0.0724-0.327 * 1.3589
=-2.00

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

This Year (Sep16) TTM:Last Year (Sep15) TTM:
Accounts Receivable was $127.8 Mil.
Revenue was 253.985 + 255.148 + 194.844 + 269.617 = $973.6 Mil.
Gross Profit was 132.15 + 141.059 + 78.596 + 14.702 = $366.5 Mil.
Total Current Assets was $162.7 Mil.
Total Assets was $4,816.8 Mil.
Property, Plant and Equipment(Net PPE) was $4,489.3 Mil.
Depreciation, Depletion and Amortization(DDA) was $311.3 Mil.
Selling, General & Admin. Expense(SGA) was $122.1 Mil.
Total Current Liabilities was $405.2 Mil.
Long-Term Debt was $2,903.1 Mil.
Net Income was -24.59 + -380.668 + -185.193 + -885.077 = $-1,475.5 Mil.
Non Operating Income was -41.74 + -601.877 + -186.148 + -1318.76 = $-2,148.5 Mil.
Cash Flow from Operations was 96.415 + 60.915 + 2.029 + 164.907 = $324.3 Mil.
Accounts Receivable was $159.3 Mil.
Revenue was 303.6 + 376.694 + 307.649 + 483.684 = $1,471.6 Mil.
Gross Profit was 174.223 + 229.364 + 153.933 + 274.903 = $832.4 Mil.
Total Current Assets was $465.6 Mil.
Total Assets was $7,355.2 Mil.
Property, Plant and Equipment(Net PPE) was $6,681.9 Mil.
Depreciation, Depletion and Amortization(DDA) was $576.4 Mil.
Selling, General & Admin. Expense(SGA) was $170.4 Mil.
Total Current Liabilities was $396.1 Mil.
Long-Term Debt was $3,321.3 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)
=(127.77 / 973.594) / (159.254 / 1471.627)
=0.1312354 / 0.10821628
=1.2127

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)
=(832.423 / 1471.627) / (366.507 / 973.594)
=0.56564809 / 0.37644747
=1.5026

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 - (162.717 + 4489.338) / 4816.801) / (1 - (465.617 + 6681.858) / 7355.152)
=0.03420237 / 0.02823558
=1.2113

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
=973.594 / 1471.627
=0.6616

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))
=(576.422 / (576.422 + 6681.858)) / (311.275 / (311.275 + 4489.338))
=0.07941578 / 0.06484068
=1.2248

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)
=(122.107 / 973.594) / (170.397 / 1471.627)
=0.12541881 / 0.11578817
=1.0832

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)
=((2903.051 + 405.245) / 4816.801) / ((3321.315 + 396.128) / 7355.152)
=0.68682431 / 0.50542028
=1.3589

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
=(-1475.528 - -2148.525 - 324.266) / 4816.801
=0.0724

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 -2.00 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 local exchange's currency.

Denbury Resources Inc Annual Data

Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15Dec16
DSRI 5.10170.63971.95160.82881.13130.51831.21750.74361.19820
GMI 1.07540.97641.23850.86550.86681.12981.12580.97751.37930.8881
AQI 1.3860.96481.51932.2140.90550.93320.9470.95050.274229.702
SGI 1.32881.40350.65112.16141.20171.06371.02470.96750.51640.7758
DEPI 0.98121.11.13770.99851.24620.82191.20130.90840.6020.09
SGAI 1.18221.15021.5810.58480.97240.81650.9841.12711.76790.9802
LVGI 1.02121.0121.15010.83250.98981.02130.99950.98271.87971.0545
TATA -0.1251-0.1181-0.0844-0.056-0.0612-0.0746-0.0698-0.07840.1397-0.0747
M-score 1.16-3.05-2.11-1.32-2.54-3.17-2.51-3.17-2.637.47

Denbury Resources Inc Quarterly Data

Sep14Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16Dec16
DSRI 0.93960.74360.50490.84390.79581.19821.18871.02591.21270
GMI 0.90790.97530.95491.08341.14521.42521.4581.48941.50260.8881
AQI 0.95630.95050.95621.12040.22450.27420.24270.23111.211329.702
SGI 1.00930.96750.81570.69510.5770.51640.54480.56670.66160.7758
DEPI 0.88540.90840.92090.79280.67810.6020.67610.87751.22480.09
SGAI 1.42431.05591.49151.6771.88131.98721.49591.29361.08320.9798
LVGI 1.02510.98270.91341.01571.48961.87972.00731.87481.35891.0545
TATA -0.061-0.0784-0.0886-0.06590.00620.13970.18150.16940.0724-0.0776
M-score -2.97-3.16-3.62-3.26-3.60-2.65-2.38-2.45-2.007.45
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