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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 Family Dollar Stores Inc was 12.24. The lowest was -3.79. 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 Family Dollar Stores 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 * 1.8378||+||0.528 * 1.0221||+||0.404 * 0.7821||+||0.892 * 1.0326||+||0.115 * 0.8646|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0305||+||4.679 * -0.0646||-||0.327 * 0.8905|
|This Year (Feb15) TTM:||Last Year (Feb14) TTM:|
|Accounts Receivable was $66 Mil.|
Revenue was 2798.268 + 2556.422 + 2614.054 + 2658.964 = $10,628 Mil.
Gross Profit was 931.087 + 852.947 + 861.297 + 910.853 = $3,556 Mil.
Total Current Assets was $2,245 Mil.
Total Assets was $4,005 Mil.
Property, Plant and Equipment(Net PPE) was $1,688 Mil.
Depreciation, Depletion and Amortization(DDA) was $281 Mil.
Selling, General & Admin. Expense(SGA) was $3,102 Mil.
Total Current Liabilities was $1,364 Mil.
Long-Term Debt was $299 Mil.
Net Income was 76.706 + 41.377 + 34.46 + 81.147 = $234 Mil.
Non Operating Income was 8.045 + 7.994 + 7.844 + 8.458 = $32 Mil.
Cash Flow from Operations was 195.945 + -93.144 + 216.161 + 141.077 = $460 Mil.
|Accounts Receivable was $35 Mil.
Revenue was 2716.621 + 2499.691 + 2502.266 + 2573.506 = $10,292 Mil.
Gross Profit was 902.294 + 856.841 + 868.443 + 892.458 = $3,520 Mil.
Total Current Assets was $2,132 Mil.
Total Assets was $4,003 Mil.
Property, Plant and Equipment(Net PPE) was $1,778 Mil.
Depreciation, Depletion and Amortization(DDA) was $250 Mil.
Selling, General & Admin. Expense(SGA) was $2,915 Mil.
Total Current Liabilities was $1,382 Mil.
Long-Term Debt was $484 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)|
|=||(65.984 / 10627.708)||/||(34.769 / 10292.084)|
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)|
|=||(852.947 / 10292.084)||/||(931.087 / 10627.708)|
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 - (2244.513 + 1687.799) / 4004.993)||/||(1 - (2131.766 + 1778.153) / 4002.804)|
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))|
|=||(250.347 / (250.347 + 1778.153))||/||(281.042 / (281.042 + 1687.799))|
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)|
|=||(3102.396 / 10627.708)||/||(2915.449 / 10292.084)|
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)|
|=||((299.101 + 1363.51) / 4004.993)||/||((484.15 + 1381.943) / 4002.804)|
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|
|=||(233.69 - 32.341||-||460.039)||/||4004.993|
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.
Family Dollar Stores Inc has a M-score of -2.04 signals that the company is likely to 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
Family Dollar Stores Inc Annual Data
Family Dollar Stores Inc Quarterly Data