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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.
During the past 13 years, the highest Beneish M-Score of DaVita HealthCare Partners Inc was -1.27. The lowest was -3.45. And the median was -2.60.
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 DaVita HealthCare Partners 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 * 0.9446||+||0.528 * 1.0551||+||0.404 * 0.9663||+||0.892 * 1.0876||+||0.115 * 1.0063|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9859||+||4.679 * -0.0357||-||0.327 * 0.9412|
|This Year (Dec14) TTM:||Last Year (Dec13) TTM:|
|Accounts Receivable was $1,526 Mil.|
Revenue was 3328.017 + 3251.824 + 3172.489 + 3042.776 = $12,795 Mil.
Gross Profit was 961.556 + 925.29 + 925.951 + 863.004 = $3,676 Mil.
Total Current Assets was $3,877 Mil.
Total Assets was $17,943 Mil.
Property, Plant and Equipment(Net PPE) was $2,469 Mil.
Depreciation, Depletion and Amortization(DDA) was $591 Mil.
Selling, General & Admin. Expense(SGA) was $1,262 Mil.
Total Current Liabilities was $2,089 Mil.
Long-Term Debt was $8,383 Mil.
Net Income was 208.02 + 184.122 + 147.683 + 183.289 = $723 Mil.
Non Operating Income was 0.229 + -1.246 + -95.855 + 1.698 = $-95 Mil.
Cash Flow from Operations was -69.991 + 847.9 + 262.391 + 419.107 = $1,459 Mil.
|Accounts Receivable was $1,485 Mil.
Revenue was 3063.209 + 2999.586 + 2871.673 + 2829.582 = $11,764 Mil.
Gross Profit was 935.377 + 904.252 + 857.353 + 868.691 = $3,566 Mil.
Total Current Assets was $3,472 Mil.
Total Assets was $17,099 Mil.
Property, Plant and Equipment(Net PPE) was $2,189 Mil.
Depreciation, Depletion and Amortization(DDA) was $528 Mil.
Selling, General & Admin. Expense(SGA) was $1,176 Mil.
Total Current Liabilities was $2,462 Mil.
Long-Term Debt was $8,141 Mil.
1. DSRI = Days Sales in Receivables Index
A large increase in DSR could be indicative of revenue inflation.
|DSRI||=||(Receivables_t / Revenue_t)||/||(Receivables_t-1 / Revenue_t-1)|
|=||(1525.849 / 12795.106)||/||(1485.163 / 11764.05)|
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.
|=||(GrossProfit_t-1 / Revenue_t-1)||/||(GrossProfit_t / Revenue_t)|
|=||(925.29 / 11764.05)||/||(961.556 / 12795.106)|
3. AQI = Asset Quality Index
AQI is the ratio of asset quality in year t to year t-1.
|AQI||=||(1 - (CurrentAssets_t + PPE_t) / TotalAssets_t)||/||(1 - (CurrentAssets_t-1 + PPE_t-1) / TotalAssets_t-1)|
|=||(1 - (3876.797 + 2469.099) / 17942.715)||/||(1 - (3472.278 + 2189.411) / 17098.877)|
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.
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))|
|=||(528.119 / (528.119 + 2189.411))||/||(590.935 / (590.935 + 2469.099))|
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)|
|=||(1261.506 / 12795.106)||/||(1176.485 / 11764.05)|
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)|
|=||((8383.28 + 2088.652) / 17942.715)||/||((8141.231 + 2462.049) / 17098.877)|
8. TATA = Total Accruals to Total Assets
Total accruals calculated as the change in working capital accounts other than cash less depreciation.
|=||(NetIncome_t - NonOperatingIncome_t||-||CashFlowsfromOperations_t)||/||TotalAssets_t|
|=||(723.114 - -95.174||-||1459.407)||/||17942.715|
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.
DaVita HealthCare Partners Inc has a M-score of -2.58 suggests that the company will not be a manipulator.
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
DaVita HealthCare Partners Inc Annual Data
DaVita HealthCare Partners Inc Quarterly Data