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Forestar Group Inc (NYSE:FOR)
Beneish M-Score
-5.62 (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 -5.62 suggests that the company is not a manipulator.

FOR' s Beneish M-Score Range Over the Past 10 Years
Min: -16.28   Max: 9.21
Current: -5.62

-16.28
9.21

During the past 12 years, the highest Beneish M-Score of Forestar Group Inc was 9.21. The lowest was -16.28. And the median was -2.15.


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 * 0.494+0.528 * -0.9564+0.404 * 1.1866+0.892 * 0.7041+0.115 * 0.4461
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.6844+4.679 * -0.2562-0.327 * 1.2171
=-5.62

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

This Year (Sep15) TTM:Last Year (Sep14) TTM:
Accounts Receivable was $17.1 Mil.
Revenue was 43.168 + 57.43 + 47.805 + 80.316 = $228.7 Mil.
Gross Profit was -69.572 + -35.009 + 17.289 + -6.259 = $-93.6 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.
Net Income was -164.216 + -34.507 + -8.158 + -11.8 = $-218.7 Mil.
Non Operating Income was 1.222 + 7.205 + 5.138 + -21.128 = $-7.6 Mil.
Cash Flow from Operations was 2.473 + 1.253 + -18.766 + 70.696 = $55.7 Mil.
Accounts Receivable was $49.1 Mil.
Revenue was 58.84 + 83.013 + 84.605 + 98.388 = $324.8 Mil.
Gross Profit was 19.606 + 33.261 + 35.025 + 39.181 = $127.1 Mil.
Total Current Assets was $825.4 Mil.
Total Assets was $1,268.2 Mil.
Property, Plant and Equipment(Net PPE) was $271.3 Mil.
Depreciation, Depletion and Amortization(DDA) was $37.4 Mil.
Selling, General & Admin. Expense(SGA) was $23.3 Mil.
Total Current Liabilities was $76.1 Mil.
Long-Term Debt was $429.3 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)
=(17.09 / 228.719) / (49.138 / 324.846)
=0.07472051 / 0.15126552
=0.494

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)
=(-35.009 / 324.846) / (-69.572 / 228.719)
=0.3911792 / -0.40902155
=-0.9564

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 - (741.577 + 132.502) / 1041.216) / (1 - (825.378 + 271.302) / 1268.239)
=0.16052097 / 0.1352734
=1.1866

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
=228.719 / 324.846
=0.7041

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))
=(37.391 / (37.391 + 271.302)) / (49.386 / (49.386 + 132.502))
=0.12112682 / 0.27151874
=0.4461

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)
=(27.599 / 228.719) / (23.272 / 324.846)
=0.12066772 / 0.0716401
=1.6844

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)
=((435.295 + 69.699) / 1041.216) / ((429.295 + 76.095) / 1268.239)
=0.48500407 / 0.39849744
=1.2171

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
=(-218.681 - -7.563 - 55.656) / 1041.216
=-0.2562

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 -5.62 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 own currency.

Forestar Group Inc Annual Data

Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14
DSRI 10.78381.59510.37292.25336.05421.13450.60860.8823
GMI 1.05451.08280.88670.95291.24721.03590.98451.30741.4775
AQI 0.18010.18625.4291.12061.06710.93030.9420.74341.0688
SGI 1.45070.78910.89740.91570.69311.33751.2731.91810.9267
DEPI 216.91130.00711.17660.84821.01531.220319.43240.71150.8139
SGAI 1.10111.55851.331.47031.08870.77231.08840.45770.8454
LVGI 0.3644.88611.07050.69621.0011.05871.33060.85811.1197
TATA 0.13030.12530.0706-0.0964-0.01810.00130.0186-0.0641-0.0857
M-score 23.25-4.05-0.02-3.56-1.542.51-0.06-2.16-2.81

Forestar Group Inc Quarterly Data

Jun13Sep13Dec13Mar14Jun14Sep14Dec14Mar15Jun15Sep15
DSRI 0.87970.57410.60860.71250.94941.25390.88230.65970.55340.494
GMI 1.16941.20311.30741.10221.02321.05271.47751.7167-22.9492-0.9564
AQI 0.9650.90.74340.87720.82890.78911.06881.0411.31381.1866
SGI 1.85681.90631.91811.3151.27881.07840.92670.84850.71650.7041
DEPI 3.80480.810.71151.04871.12070.94630.81390.82110.68990.4461
SGAI 0.77630.47350.45770.48930.53930.73020.84541.28981.34911.6844
LVGI 1.32681.05030.85810.91260.97771.01191.11971.15681.08931.2171
TATA -0.0314-0.0396-0.0641-0.0387-0.0477-0.065-0.0857-0.0823-0.1057-0.2562
M-score -1.64-2.13-2.16-2.52-2.46-2.50-2.81-3.04-16.28-5.62
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