Switch to:
M D C Holdings Inc (NYSE:MDC)
Beneish M-Score
-1.03 (As of Today)

Warning Sign:

Beneish M-Score -1.03 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.

M D C Holdings Inc has a M-score of -1.03 signals that the company is a manipulator.

MDC' s 10-Year Beneish M-Score Range
Min: -4.76   Max: 3.19
Current: -1.03

-4.76
3.19

During the past 13 years, the highest Beneish M-Score of M D C Holdings Inc was 3.19. The lowest was -4.76. And the median was -1.91.


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 M D C Holdings 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 * 0.7626+0.528 * 0.895+0.404 * 1.8602+0.892 * 1.2392+0.115 * 1.1439
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9495+4.679 * 0.2354-0.327 * 0.8902
=-1.03

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

This Year (Mar14) TTM:Last Year (Mar13) TTM:
Accounts Receivable was $30 Mil.
Revenue was 318.534 + 420.903 + 448 + 416.018 = $1,603 Mil.
Gross Profit was 59.056 + 39.757 + 92.726 + 86.656 = $278 Mil.
Total Current Assets was $2,202 Mil.
Total Assets was $2,550 Mil.
Property, Plant and Equipment(Net PPE) was $32 Mil.
Depreciation, Depletion and Amortization(DDA) was $4 Mil.
Selling, General & Admin. Expense(SGA) was $213 Mil.
Total Current Liabilities was $205 Mil.
Long-Term Debt was $1,096 Mil.
Net Income was 11.504 + 30.709 + 36.251 + 224.909 = $303 Mil.
Non Operating Income was -5.727 + 43.356 + -7.409 + 1.33 = $32 Mil.
Cash Flow from Operations was -114.248 + -43.689 + -79.617 + -90.825 = $-328 Mil.
Accounts Receivable was $32 Mil.
Revenue was 331.748 + 358.891 + 334.33 + 268.934 = $1,294 Mil.
Gross Profit was 57.672 + 32.994 + 63.261 + 46.996 = $201 Mil.
Total Current Assets was $1,966 Mil.
Total Assets was $2,142 Mil.
Property, Plant and Equipment(Net PPE) was $33 Mil.
Depreciation, Depletion and Amortization(DDA) was $5 Mil.
Selling, General & Admin. Expense(SGA) was $181 Mil.
Total Current Liabilities was $233 Mil.
Long-Term Debt was $995 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)
=(30.134 / 1603.455) / (31.885 / 1293.903)
=0.01879317 / 0.0246425
=0.7626

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)
=(39.757 / 1293.903) / (59.056 / 1603.455)
=0.15528444 / 0.17349723
=0.895

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 - (2201.844 + 31.54) / 2550.237) / (1 - (1966.189 + 33.056) / 2142.334)
=0.12424453 / 0.06679117
=1.8602

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
=1603.455 / 1293.903
=1.2392

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))
=(4.537 / (4.537 + 33.056)) / (3.72 / (3.72 + 31.54))
=0.12068736 / 0.10550199
=1.1439

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)
=(213.423 / 1603.455) / (181.372 / 1293.903)
=0.13310196 / 0.14017434
=0.9495

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)
=((1095.958 + 205.25) / 2550.237) / ((995.032 + 232.859) / 2142.334)
=0.51023023 / 0.57315573
=0.8902

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
=(303.373 - 31.55 - -328.379) / 2550.237
=0.2354

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.

M D C Holdings Inc has a M-score of -1.03 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.

M D C Holdings Inc Annual Data

Dec04Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13
DSRI 2.68894.19930.92351.66432.81211.27790.12041.22420.92170.5898
GMI 0.49670.98061.2431.54871.02650.72511.23891.28380.85180.8626
AQI 0.87911.91251.23821.12280.56890.94111.08331.93281.2251.5172
SGI 1.37421.21920.98140.6010.50530.61611.03180.88151.41511.4091
DEPI 1.31591.12190.92321.10652.66581.57090.99710.82751.18771.143
SGAI 5.93290.99381.10961.23751.1871.19440.92220.92490.66010.9047
LVGI 1.01491.00570.90451.14091.10420.99111.09970.86771.02730.9732
TATA 0.15020.2411-0.0094-0.1703-0.3475-0.07330.0538-0.00960.07510.2153
M-score -1.022.16-2.38-2.76-2.91-3.04-2.87-1.86-1.75-1.31

M D C Holdings Inc Quarterly Data

Dec11Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14
DSRI 1.22421.20032.24931.44320.92790.60750.56780.54550.59040.7626
GMI 1.28721.1320.73530.52170.88240.84460.91770.95560.86140.895
AQI 1.93282.52932.40443.61391.2251.17261.63890.97421.51721.8602
SGI 0.88150.89011.08971.27661.40561.54091.60131.51141.40771.2392
DEPI 0.82750.90480.98271.09281.18771.21671.25431.21511.1431.1439
SGAI 0.92490.86550.72710.6550.66450.71090.77870.8890.90560.9495
LVGI 0.86770.8680.86350.89921.02731.09280.98791.01540.97320.8902
TATA -0.0093-0.0189-0.00570.03630.06870.08790.19850.2210.20810.2354
M-score -1.86-1.74-0.76-0.75-1.76-1.92-1.13-1.40-1.34-1.03
Get WordPress Plugins for easy affiliate links on Stock Tickers and Guru Names | Earn affiliate commissions by embedding GuruFocus Charts
GuruFocus Affiliate Program: Earn up to $400 per referral. ( Learn More)
Free 7-day Trial
FEEDBACK
Email Hide