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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.
Forestar Group Inc has a M-score of -2.39 suggests that the company is not a manipulator.
During the past 11 years, the highest Beneish M-Score of Forestar Group Inc was 9.21. The lowest was -3.57. And the median was -1.64.
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 Forestar Group 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 * 0.9494||+||0.528 * 1.0232||+||0.404 * 0.8289||+||0.892 * 1.2788||+||0.115 * 1.1207|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.5393||+||4.679 * -0.0339||-||0.327 * 0.9777|
|This Year (Jun14) TTM:||Last Year (Jun13) TTM:|
|Accounts Receivable was $46.8 Mil.|
Revenue was 83.013 + 84.605 + 98.388 + 75.107 = $341.1 Mil.
Gross Profit was 33.261 + 35.025 + 39.181 + 32.608 = $140.1 Mil.
Total Current Assets was $783.5 Mil.
Total Assets was $1,222.4 Mil.
Property, Plant and Equipment(Net PPE) was $263.8 Mil.
Depreciation, Depletion and Amortization(DDA) was $34.3 Mil.
Selling, General & Admin. Expense(SGA) was $24.1 Mil.
Total Current Liabilities was $64.6 Mil.
Long-Term Debt was $400.3 Mil.
Net Income was 14.822 + 8.334 + 12.999 + 11.83 = $48.0 Mil.
Non Operating Income was 3.227 + 3.285 + 5.381 + 4.584 = $16.5 Mil.
Cash Flow from Operations was 13.452 + 5.543 + 43.694 + 10.21 = $72.9 Mil.
|Accounts Receivable was $38.5 Mil.
Revenue was 60.079 + 97.471 + 68.577 + 40.61 = $266.7 Mil.
Gross Profit was 22.463 + 35.899 + 33.073 + 20.636 = $112.1 Mil.
Total Current Assets was $624.2 Mil.
Total Assets was $979.6 Mil.
Property, Plant and Equipment(Net PPE) was $186.1 Mil.
Depreciation, Depletion and Amortization(DDA) was $27.6 Mil.
Selling, General & Admin. Expense(SGA) was $34.9 Mil.
Total Current Liabilities was $49.4 Mil.
Long-Term Debt was $331.6 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)|
|=||(46.763 / 341.113)||/||(38.515 / 266.737)|
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)|
|=||(35.025 / 266.737)||/||(33.261 / 341.113)|
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 - (783.539 + 263.769) / 1222.352)||/||(1 - (624.2 + 186.119) / 979.552)|
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))|
|=||(27.581 / (27.581 + 186.119))||/||(34.33 / (34.33 + 263.769))|
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)|
|=||(24.077 / 341.113)||/||(34.908 / 266.737)|
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)|
|=||((400.328 + 64.618) / 1222.352)||/||((331.647 + 49.448) / 979.552)|
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|
|=||(47.985 - 16.477||-||72.899)||/||1222.352|
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.
Forestar Group Inc has a M-score of -2.39 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
Forestar Group Inc Annual Data
Forestar Group Inc Quarterly Data