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Beneish M-Score 0.51 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 0.51 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 -2.67.
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 * 4.7354||+||0.528 * 1.0161||+||0.404 * 0.5359||+||0.892 * 1.0094||+||0.115 * 0.8938|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0444||+||4.679 * -0.056||-||0.327 * 0.9817|
|This Year (Aug14) TTM:||Last Year (Aug13) TTM:|
|Accounts Receivable was $64 Mil.|
Revenue was 2614.054 + 2658.964 + 2716.621 + 2499.691 = $10,489 Mil.
Gross Profit was 861.297 + 910.853 + 902.294 + 856.841 = $3,531 Mil.
Total Current Assets was $2,102 Mil.
Total Assets was $3,857 Mil.
Property, Plant and Equipment(Net PPE) was $1,688 Mil.
Depreciation, Depletion and Amortization(DDA) was $265 Mil.
Selling, General & Admin. Expense(SGA) was $3,022 Mil.
Total Current Liabilities was $1,129 Mil.
Long-Term Debt was $484 Mil.
Net Income was 34.46 + 81.147 + 90.869 + 78.027 = $285 Mil.
Non Operating Income was 7.844 + 8.458 + 7.574 + 7.464 = $31 Mil.
Cash Flow from Operations was 216.161 + 141.077 + 85.791 + 26.133 = $469 Mil.
|Accounts Receivable was $13 Mil.
Revenue was 2502.266 + 2573.506 + 2893.997 + 2421.688 = $10,391 Mil.
Gross Profit was 868.443 + 892.458 + 967.05 + 826.794 = $3,555 Mil.
Total Current Assets was $1,857 Mil.
Total Assets was $3,710 Mil.
Property, Plant and Equipment(Net PPE) was $1,733 Mil.
Depreciation, Depletion and Amortization(DDA) was $239 Mil.
Selling, General & Admin. Expense(SGA) was $2,867 Mil.
Total Current Liabilities was $1,080 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)|
|=||(64.458 / 10489.33)||/||(13.485 / 10391.457)|
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)|
|=||(910.853 / 10391.457)||/||(861.297 / 10489.33)|
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 - (2102.046 + 1688.213) / 3857.295)||/||(1 - (1857.005 + 1732.544) / 3709.861)|
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))|
|=||(239.485 / (239.485 + 1732.544))||/||(265.461 / (265.461 + 1688.213))|
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)|
|=||(3022.219 / 10489.33)||/||(2866.788 / 10391.457)|
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)|
|=||((484.226 + 1129.03) / 3857.295)||/||((500.275 + 1080.222) / 3709.861)|
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|
|=||(284.503 - 31.34||-||469.162)||/||3857.295|
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 0.51 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