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M.D.C. Holdings Inc (NYSE:MDC)
Beneish M-Score
-1.98 (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.

M.D.C. Holdings Inc has a M-score of -1.98 signals that the company is a manipulator.

MDC' s Beneish M-Score Range Over the Past 10 Years
Min: -5.38   Max: 3.19
Current: -1.98

-5.38
3.19

During the past 13 years, the highest Beneish M-Score of M.D.C. Holdings Inc was 3.19. The lowest was -5.38. And the median was -1.99.


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 * 1.2738+0.528 * 1.0149+0.404 * 1.0556+0.892 * 1.183+0.115 * 0.8942
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9574+4.679 * 0.0142-0.327 * 1.013
=-1.98

* 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 $43 Mil.
Revenue was 595.42 + 571.511 + 396.744 + 530.101 = $2,094 Mil.
Gross Profit was 98.936 + 93.859 + 65.055 + 70.185 = $328 Mil.
Total Current Assets was $2,115 Mil.
Total Assets was $2,474 Mil.
Property, Plant and Equipment(Net PPE) was $29 Mil.
Depreciation, Depletion and Amortization(DDA) was $5 Mil.
Selling, General & Admin. Expense(SGA) was $246 Mil.
Total Current Liabilities was $248 Mil.
Long-Term Debt was $933 Mil.
Net Income was 26.359 + 26.913 + 9.563 + 22.595 = $85 Mil.
Non Operating Income was -1.884 + 7.714 + 2.804 + 23.776 = $32 Mil.
Cash Flow from Operations was 13.183 + -7.101 + -14.985 + 26.701 = $18 Mil.
Accounts Receivable was $29 Mil.
Revenue was 468.487 + 461.708 + 377.919 + 461.719 = $1,770 Mil.
Gross Profit was 81.905 + 76.689 + 57.802 + 65.008 = $281 Mil.
Total Current Assets was $2,025 Mil.
Total Assets was $2,351 Mil.
Property, Plant and Equipment(Net PPE) was $28 Mil.
Depreciation, Depletion and Amortization(DDA) was $4 Mil.
Selling, General & Admin. Expense(SGA) was $217 Mil.
Total Current Liabilities was $261 Mil.
Long-Term Debt was $847 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)
=(43.082 / 2093.776) / (28.588 / 1769.833)
=0.02057622 / 0.01615294
=1.2738

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)
=(281.404 / 1769.833) / (328.035 / 2093.776)
=0.15900031 / 0.15667149
=1.0149

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 - (2115.382 + 28.749) / 2474.27) / (1 - (2025.224 + 28.499) / 2350.868)
=0.13342885 / 0.12639799
=1.0556

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
=2093.776 / 1769.833
=1.183

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))
=(4.084 / (4.084 + 28.499)) / (4.687 / (4.687 + 28.749))
=0.12534144 / 0.14017825
=0.8942

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)
=(246.181 / 2093.776) / (217.358 / 1769.833)
=0.11757753 / 0.12281272
=0.9574

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)
=((933.37 + 248.278) / 2474.27) / ((846.907 + 261.351) / 2350.868)
=0.4775744 / 0.47142502
=1.013

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
=(85.43 - 32.41 - 17.798) / 2474.27
=0.0142

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 -1.98 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 local exchange's currency.

M.D.C. Holdings Inc Annual Data

Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15
DSRI 0.92351.66430.23510.95430.82212.87190.92170.58981.20410.7245
GMI 1.2431.54871.02650.72511.23891.28380.85180.86261.04431.0607
AQI 1.23821.12280.56890.94111.08331.93281.2251.51721.06280.9624
SGI 0.98140.6010.50530.61611.03180.88151.41511.40911.01321.127
DEPI 0.92321.10652.66581.57090.99710.82751.18771.1430.96430.9058
SGAI 1.10961.23751.1871.19440.92220.92490.66010.90470.94060.988
LVGI 0.90451.14091.10420.99111.09970.86771.02730.97320.89691.0049
TATA -0.0094-0.1703-0.3475-0.07330.05380.01370.07590.21640.09880.0193
M-score -2.38-2.76-5.29-3.34-2.22-0.24-1.74-1.30-1.73-2.52

M.D.C. Holdings Inc Quarterly Data

Jun14Sep14Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16
DSRI 0.65040.81471.19121.06680.94341.03590.7291.01441.54121.2738
GMI 0.94741.00971.01951.07541.0981.0621.08011.02241.00111.0149
AQI 1.16280.82851.06281.07231.14451.08670.96240.90430.99031.0556
SGI 1.14231.03881.02411.071.05491.10571.11991.09191.14371.183
DEPI 1.07691.00190.96430.89250.86720.89810.90580.99180.94930.8942
SGAI 0.95330.94890.93050.89970.94390.96330.99431.03451.00440.9574
LVGI 0.94470.96460.89690.89510.95810.91681.00491.00441.01431.013
TATA 0.11690.10980.0970.03730.02830.02430.01440.0280.04410.0142
M-score -2.05-2.15-1.75-2.07-2.23-2.15-2.54-2.29-1.66-1.98
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