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Directv (NAS:DTV)
Beneish M-Score
-3.33 (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.

Directv has a M-score of -3.33 suggests that the company is not a manipulator.

DTV' s 10-Year Beneish M-Score Range
Min: -3.43   Max: -0.97
Current: -3.33

-3.43
-0.97

During the past 13 years, the highest Beneish M-Score of Directv was -0.97. The lowest was -3.43. And the median was -2.97.


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 Directv 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 * 0.8848+0.528 * 1.0005+0.404 * 0.9709+0.892 * 1.0677+0.115 * 0.9503
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0064+4.679 * -0.1662-0.327 * 1.0253
=-3.33

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

This Year (Dec13) TTM:Last Year (Dec12) TTM:
Accounts Receivable was $2,547 Mil.
Revenue was 8594 + 7880 + 7700 + 7580 = $31,754 Mil.
Gross Profit was 3843 + 3758 + 3774 + 3737 = $15,112 Mil.
Total Current Assets was $5,953 Mil.
Total Assets was $21,905 Mil.
Property, Plant and Equipment(Net PPE) was $9,117 Mil.
Depreciation, Depletion and Amortization(DDA) was $2,828 Mil.
Selling, General & Admin. Expense(SGA) was $7,134 Mil.
Total Current Liabilities was $6,530 Mil.
Long-Term Debt was $18,284 Mil.
Net Income was 810 + 699 + 660 + 690 = $2,859 Mil.
Non Operating Income was 100 + 43 + -75 + 38 = $106 Mil.
Cash Flow from Operations was 2039 + 1345 + 1474 + 1536 = $6,394 Mil.
Accounts Receivable was $2,696 Mil.
Revenue was 8054 + 7416 + 7224 + 7046 = $29,740 Mil.
Gross Profit was 3626 + 3459 + 3597 + 3479 = $14,161 Mil.
Total Current Assets was $5,554 Mil.
Total Assets was $20,555 Mil.
Property, Plant and Equipment(Net PPE) was $8,395 Mil.
Depreciation, Depletion and Amortization(DDA) was $2,437 Mil.
Selling, General & Admin. Expense(SGA) was $6,639 Mil.
Total Current Liabilities was $5,541 Mil.
Long-Term Debt was $17,170 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)
=(2547 / 31754) / (2696 / 29740)
=0.08021037 / 0.09065232
=0.8848

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)
=(3758 / 29740) / (3843 / 31754)
=0.47616005 / 0.47590855
=1.0005

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 - (5953 + 9117) / 21905) / (1 - (5554 + 8395) / 20555)
=0.31202922 / 0.32138166
=0.9709

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
=31754 / 29740
=1.0677

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))
=(2437 / (2437 + 8395)) / (2828 / (2828 + 9117))
=0.22498154 / 0.23675178
=0.9503

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)
=(7134 / 31754) / (6639 / 29740)
=0.22466461 / 0.2232347
=1.0064

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)
=((18284 + 6530) / 21905) / ((17170 + 5541) / 20555)
=1.13280073 / 1.10488932
=1.0253

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
=(2859 - 106 - 6394) / 21905
=-0.1662

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.

Directv has a M-score of -3.33 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.

Directv Annual Data

Dec04Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13
DSRI 0.84550.97041.16160.97650.81181.04281.10181.09450.99760.8848
GMI 3.50620.25361.20261.00350.97691.00340.99081.02121.02371.0005
AQI 2.06110.86320.980.99730.87541.04221.05720.93960.87790.9709
SGI 1.21211.15891.12091.16871.14191.09511.11761.12961.09231.0677
DEPI 0.64241.09211.15240.88150.8550.86341.06891.12881.06680.9503
SGAI 0.24672.37130.99380.9180.48362.11210.43950.98312.09361.0064
LVGI 0.81391.11921.12041.00761.32321.17111.23631.14591.1181.0253
TATA -0.0616-0.0522-0.1178-0.1474-0.1478-0.166-0.1705-0.1385-0.1374-0.1662
M-score -0.82-3.32-2.70-3.04-3.31-3.38-3.03-2.97-3.30-3.33

Directv Quarterly Data

Sep11Dec11Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13
DSRI 1.05321.09451.01791.04561.10280.99761.11331.0310.91360.8848
GMI 1.00341.02121.02711.02921.03221.02371.0191.01881.00361.0005
AQI 1.37110.93960.91780.93360.65670.87791.01390.90841.00750.9709
SGI 1.12451.12961.12651.11781.10481.09231.0831.0761.07081.0677
DEPI 0.8481.12881.1561.14161.41921.06681.02310.97670.97390.9503
SGAI 0.51520.98310.97250.95910.91432.09362.07462.06012.06071.0064
LVGI 1.24141.14591.14341.15421.1151.1181.11921.07831.07491.0253
TATA -0.1366-0.1385-0.1345-0.1511-0.1423-0.1374-0.1277-0.1382-0.1456-0.1662
M-score -2.82-2.97-3.02-3.08-3.05-3.30-3.10-3.27-3.38-3.33
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