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Family Dollar Stores Inc (NYSE:FDO)
Beneish M-Score
4.48 (As of Today)

Warning Sign:

Beneish M-Score 4.48 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 4.48 signals that the company is a manipulator.

FDO' s 10-Year Beneish M-Score Range
Min: -3.68   Max: 12.24
Current: 4.48

-3.68
12.24

During the past 13 years, the highest Beneish M-Score of Family Dollar Stores Inc was 12.24. The lowest was -3.68. And the median was -2.61.


Definition

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 * 8.7991+0.528 * 0.9971+0.404 * 0.7145+0.892 * 1.0121+0.115 * 0.8986
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0475+4.679 * -0.0197-0.327 * 0.9771
=4.48

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.

This Year (May14) TTM:Last Year (May13) TTM:
Accounts Receivable was $38 Mil.
Revenue was 2658.964 + 2716.621 + 2499.691 + 2502.266 = $10,378 Mil.
Gross Profit was 910.853 + 902.294 + 856.841 + 868.443 = $3,538 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 $258 Mil.
Selling, General & Admin. Expense(SGA) was $2,978 Mil.
Total Current Liabilities was $1,301 Mil.
Long-Term Debt was $484 Mil.
Net Income was 81.147 + 90.869 + 78.027 + 102.213 = $352 Mil.
Non Operating Income was 8.458 + 7.574 + 7.464 + 7.369 = $31 Mil.
Cash Flow from Operations was 141.077 + 85.791 + 26.133 + 146.622 = $400 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 $235 Mil.
Selling, General & Admin. Expense(SGA) was $2,809 Mil.
Total Current Liabilities was $1,275 Mil.
Long-Term Debt was $500 Mil.



1. DSRI = Days Sales in Receivables Index

Measured as the ratio of days’ sales in receivables in year t to year t-1.

A large increase in DSR could be indicative of revenue inflation.

DSRI=(Receivables_t / Revenue_t) / (Receivables_t-1 / Revenue_t-1)
=(38.241 / 10377.542) / (4.294 / 10253.316)
=0.00368498 / 0.00041879
=8.7991

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.

GMI=GrossMargin_t-1 / GrossMargin_t
=(GrossProfit_t-1 / Revenue_t-1) / (GrossProfit_t / Revenue_t)
=(902.294 / 10253.316) / (910.853 / 10377.542)
=0.33998806 / 0.34097005
=0.9971

3. AQI = Asset Quality Index

AQI is the ratio of asset quality in year t to year t-1.

Asset quality is measured as the ratio of non-current assets other than plant, property and equipment to total assets.

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)
=0.02158258 / 0.03020774
=0.7145

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.

SGI=Sales_t / Sales_t-1
=Revenue_t / Revenue_t-1
=10377.542 / 10253.316
=1.0121

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))
=(234.513 / (234.513 + 1832.178)) / (258.261 / (258.261 + 1786.911))
=0.1134727 / 0.12627838
=0.8986

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)
=(2978.46 / 10377.542) / (2809.482 / 10253.316)
=0.28701016 / 0.27400716
=1.0475

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)
=0.45052136 / 0.46109603
=0.9771

8. TATA = Total Accruals to Total Assets

Total accruals calculated as the change in working capital accounts other than cash less depreciation.

TATA=(IncomefromContinuingOperations_t - CashFlowsfromOperations_t) / TotalAssets_t
=(NetIncome_t - NonOperatingIncome_t - CashFlowsfromOperations_t) / TotalAssets_t
=(352.256 - 30.865 - 399.623) / 3963.104
=-0.0197

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 4.48 signals that the company is likely to be a manipulator.


Related Terms

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


Historical Data

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.

Family Dollar Stores Inc Annual Data

Aug04Aug05Aug06Aug07Aug08Aug09Aug10Aug11Aug12Aug13
DSRI 11117.32950.15451.16060101
GMI 0.99911.02760.99310.9751.01150.96420.9761.00621.01541.0213
AQI 0.83681.57180.9310.94799.25010.71171.07090.8620.53041.0079
SGI 1.11191.10281.09791.06871.02181.05971.0631.08651.09161.1136
DEPI 1.02650.95130.90440.92880.97640.93210.98071.07441.01021.0166
SGAI 1.01541.04041.01661.03021.00241.01060.99020.98710.97961.0054
LVGI 1.09811.12781.31961.07360.94210.92980.94951.18220.90690.9084
TATA -0.0522-0.034-0.0836-0.0633-0.1049-0.0839-0.0783-0.04710.0154-0.0154
M-score -2.72-2.36-2.9312.24-0.37-2.79-3.68-2.72-3.39-2.41

Family Dollar Stores Inc Quarterly Data

Feb12May12Aug12Nov12Feb13May13Aug13Nov13Feb14May14
DSRI 11000.84521112.63498.7991
GMI 1.01891.01891.01541.01821.02421.02961.02131.01231.00150.9971
AQI 0.77350.74250.53040.55370.55420.68581.00790.83480.75360.7145
SGI 1.08291.08731.09161.10411.12871.12661.11361.09011.02511.0121
DEPI 1.10131.05571.01021.03091.03231.09061.01660.96830.95110.8986
SGAI 0.97060.97180.97960.98760.99560.99811.00541.00991.03371.0475
LVGI 0.95460.92760.90690.96290.96260.97160.90840.95040.98670.9771
TATA -0.0369-0.0170.01540.00720.0327-0.0104-0.0154-0.0292-0.0215-0.0197
M-score -2.63-2.54-3.39-3.43-2.51-2.51-2.41-2.59-1.164.48
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