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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 -2.61.
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 * 1||+||0.528 * 1.0237||+||0.404 * 0.7523||+||0.892 * 1.0073||+||0.115 * 0.8832|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.046||+||4.679 * -0.0332||-||0.327 * 0.935|
|This Year (Nov14) TTM:||Last Year (Nov13) TTM:|
|Accounts Receivable was $44 Mil.|
Revenue was 2556.422 + 2614.054 + 2658.964 + 2716.621 = $10,546 Mil.
Gross Profit was 852.947 + 861.297 + 910.853 + 902.294 = $3,527 Mil.
Total Current Assets was $2,247 Mil.
Total Assets was $4,032 Mil.
Property, Plant and Equipment(Net PPE) was $1,709 Mil.
Depreciation, Depletion and Amortization(DDA) was $273 Mil.
Selling, General & Admin. Expense(SGA) was $3,059 Mil.
Total Current Liabilities was $1,476 Mil.
Long-Term Debt was $299 Mil.
Net Income was 41.377 + 34.46 + 81.147 + 90.869 = $248 Mil.
Non Operating Income was 7.994 + 7.844 + 8.458 + 7.574 = $32 Mil.
Cash Flow from Operations was -93.144 + 216.161 + 141.077 + 85.791 = $350 Mil.
|Accounts Receivable was $0 Mil.
Revenue was 2499.691 + 2502.266 + 2573.506 + 2893.997 = $10,469 Mil.
Gross Profit was 856.841 + 868.443 + 892.458 + 967.05 = $3,585 Mil.
Total Current Assets was $2,052 Mil.
Total Assets was $3,908 Mil.
Property, Plant and Equipment(Net PPE) was $1,759 Mil.
Depreciation, Depletion and Amortization(DDA) was $244 Mil.
Selling, General & Admin. Expense(SGA) was $2,903 Mil.
Total Current Liabilities was $1,356 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)|
|=||(43.872 / 10546.061)||/||(0 / 10469.46)|
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)|
|=||(861.297 / 10469.46)||/||(852.947 / 10546.061)|
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 - (2247.332 + 1709.237) / 4031.998)||/||(1 - (2051.513 + 1759.485) / 3908.182)|
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))|
|=||(244.044 / (244.044 + 1759.485))||/||(273.429 / (273.429 + 1709.237))|
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)|
|=||(3059.124 / 10546.061)||/||(2903.485 / 10469.46)|
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)|
|=||((299.064 + 1475.603) / 4031.998)||/||((484.112 + 1355.704) / 3908.182)|
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|
|=||(247.853 - 31.87||-||349.885)||/||4031.998|
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 -2.72 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
Family Dollar Stores Inc Annual Data
Family Dollar Stores Inc Quarterly Data