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Beneish M-Score 3.17 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.
Family Dollar Stores Inc has a M-score of 3.17 signals that the company is a 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 -2.61.
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 * 7.091||+||0.528 * 0.9961||+||0.404 * 0.7145||+||0.892 * 1.2559||+||0.115 * 0.7548|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0502||+||4.679 * -0.0085||-||0.327 * 0.9771|
|This Year (May14) TTM:||Last Year (May13) TTM:|
|Accounts Receivable was $38 Mil.|
Revenue was 2658.964 + 5216.312 + 2499.691 + 2502.266 = $12,877 Mil.
Gross Profit was 910.853 + 1759.135 + 856.841 + 868.443 = $4,395 Mil.
Total Current Assets was $2,091 Mil.
Total Assets was $3,963 Mil.
Property, Plant and Equipment(Net PPE) was $1,787 Mil.
Depreciation, Depletion and Amortization(DDA) was $320 Mil.
Selling, General & Admin. Expense(SGA) was $3,715 Mil.
Total Current Liabilities was $1,301 Mil.
Long-Term Debt was $484 Mil.
Net Income was 81.147 + 168.896 + 78.027 + 102.213 = $430 Mil.
Non Operating Income was 8.458 + 15.038 + 7.464 + 7.369 = $38 Mil.
Cash Flow from Operations was 141.077 + 111.924 + 26.133 + 146.622 = $426 Mil.
|Accounts Receivable was $4 Mil.
Revenue was 2573.506 + 2893.997 + 2421.688 + 2364.125 = $10,253 Mil.
Gross Profit was 892.458 + 967.05 + 826.794 + 799.703 = $3,486 Mil.
Total Current Assets was $1,902 Mil.
Total Assets was $3,850 Mil.
Property, Plant and Equipment(Net PPE) was $1,832 Mil.
Depreciation, Depletion and Amortization(DDA) was $237 Mil.
Selling, General & Admin. Expense(SGA) was $2,817 Mil.
Total Current Liabilities was $1,275 Mil.
Long-Term Debt was $500 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)|
|=||(38.241 / 12877.233)||/||(4.294 / 10253.316)|
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)|
|=||(1759.135 / 10253.316)||/||(910.853 / 12877.233)|
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 - (2090.659 + 1786.911) / 3963.104)||/||(1 - (1901.914 + 1832.178) / 3850.404)|
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))|
|=||(237.248 / (237.248 + 1832.178))||/||(319.995 / (319.995 + 1786.911))|
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)|
|=||(3714.982 / 12877.233)||/||(2816.523 / 10253.316)|
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)|
|=||((484.188 + 1301.275) / 3963.104)||/||((500.237 + 1275.169) / 3850.404)|
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|
|=||(430.283 - 38.329||-||425.756)||/||3963.104|
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 3.17 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