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Forestar Group Inc (NYSE:FOR)
Beneish M-Score
-3.71 (As of Today)

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 -3.71 suggests that the company is not a manipulator.

FOR' s Beneish M-Score Range Over the Past 10 Years
Min: -5.81   Max: 9.21
Current: -3.71

-5.81
9.21

During the past 13 years, the highest Beneish M-Score of Forestar Group Inc was 9.21. The lowest was -5.81. And the median was -2.45.


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 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 * 1.0156+0.528 * -0.5237+0.404 * 1.1348+0.892 * 1.404+0.115 * 0.4161
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.5484+4.679 * -0.2241-0.327 * 0.4495
=-3.71

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

This Year (Sep16) TTM:Last Year (Sep15) TTM:
Accounts Receivable was $24.4 Mil.
Revenue was 47.207 + 47.992 + 41.888 + 149.237 = $286.3 Mil.
Gross Profit was 17.403 + -24.953 + 17.885 + -130.902 = $-120.6 Mil.
Total Current Assets was $556.3 Mil.
Total Assets was $692.1 Mil.
Property, Plant and Equipment(Net PPE) was $9.7 Mil.
Depreciation, Depletion and Amortization(DDA) was $18.2 Mil.
Selling, General & Admin. Expense(SGA) was $21.3 Mil.
Total Current Liabilities was $38.5 Mil.
Long-Term Debt was $112.3 Mil.
Net Income was 9.665 + 9.614 + -4.376 + -6.166 = $8.7 Mil.
Non Operating Income was 4.886 + 72.271 + 0.121 + 6.593 = $83.9 Mil.
Cash Flow from Operations was 17.268 + 7.53 + 5.009 + 50.166 = $80.0 Mil.
Accounts Receivable was $17.1 Mil.
Revenue was 32.185 + 43.625 + 47.805 + 80.316 = $203.9 Mil.
Gross Profit was 12.879 + 21.06 + 17.289 + -6.259 = $45.0 Mil.
Total Current Assets was $741.6 Mil.
Total Assets was $1,041.2 Mil.
Property, Plant and Equipment(Net PPE) was $132.5 Mil.
Depreciation, Depletion and Amortization(DDA) was $49.4 Mil.
Selling, General & Admin. Expense(SGA) was $27.6 Mil.
Total Current Liabilities was $69.7 Mil.
Long-Term Debt was $435.3 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)
=(24.368 / 286.324) / (17.09 / 203.931)
=0.08510638 / 0.08380285
=1.0156

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)
=(44.969 / 203.931) / (-120.567 / 286.324)
=0.22051086 / -0.4210859
=-0.5237

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 - (556.325 + 9.686) / 692.077) / (1 - (741.577 + 132.502) / 1041.216)
=0.18215603 / 0.16052097
=1.1348

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
=286.324 / 203.931
=1.404

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))
=(49.386 / (49.386 + 132.502)) / (18.19 / (18.19 + 9.686))
=0.27151874 / 0.65253264
=0.4161

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)
=(21.251 / 286.324) / (27.599 / 203.931)
=0.07422011 / 0.13533499
=0.5484

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)
=((112.348 + 38.54) / 692.077) / ((435.295 + 69.699) / 1041.216)
=0.21802198 / 0.48500407
=0.4495

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
=(8.737 - 83.871 - 79.973) / 692.077
=-0.2241

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 -3.71 suggests that the company will not 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 local exchange's currency.

Forestar Group Inc Annual Data

Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15
DSRI 10.78381.59510.37292.25336.05421.13450.60860.88231.3009
GMI 1.05451.08280.88670.95291.24721.03590.98451.30741.4775-0.8845
AQI 0.18010.18625.4291.12061.06710.93030.9420.74341.06881.0252
SGI 1.45070.78910.89740.91570.69311.33751.2731.91810.92670.8554
DEPI 216.91130.00711.17660.84821.01531.220319.43240.71150.28890.3984
SGAI 1.10111.55851.331.47031.08870.77231.08840.45770.84541.4332
LVGI 0.3644.88611.07050.69621.0011.05871.33060.85811.11971.1286
TATA 0.10430.12040.0706-0.0964-0.0181-0.00490.0186-0.0685-0.1159-0.2757
M-score 23.13-4.07-0.02-3.56-1.542.48-0.06-2.18-3.01-4.79

Forestar Group Inc Quarterly Data

Jun14Sep14Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16
DSRI 0.94941.25390.88230.65970.58650.5541.25111.35980.30721.0156
GMI 1.02321.05271.47751.71671.83161.774-0.9113-0.7989-0.4862-0.5237
AQI 0.82890.78911.06881.0411.31381.18661.02520.94060.99431.1348
SGI 1.27881.07840.92670.84850.6760.62780.88940.98871.17661.404
DEPI 1.12070.94630.28890.82110.68990.44610.39840.32020.22450.4161
SGAI 0.53930.73020.84541.28981.42991.88911.37841.02590.93280.5484
LVGI 0.97771.01191.11971.15681.08931.21711.12861.09670.52930.4495
TATA -0.0519-0.0691-0.1159-0.1121-0.1369-0.2936-0.2769-0.301-0.458-0.2241
M-score -2.48-2.52-3.01-3.18-3.36-4.40-4.82-4.66-5.81-3.71
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