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M D C Holdings Inc (NYSE:MDC)
Beneish M-Score
-1.96 (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 -1.96 signals that the company is a manipulator.

MDC' s 10-Year Beneish M-Score Range
Min: -5.09   Max: 3.19
Current: -1.96

-5.09
3.19

During the past 13 years, the highest Beneish M-Score of M D C Holdings Inc was 3.19. The lowest was -5.09. And the median was -1.82.


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 * 0.8451+0.528 * 1.2333+0.404 * 1.1363+0.892 * 1.0016+0.115 * 1.0019
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9842+4.679 * 0.1-0.327 * 0.9646
=-1.96

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

This Year (Sep14) TTM:Last Year (Sep13) TTM:
Accounts Receivable was $25 Mil.
Revenue was 418.403 + 431.261 + 318.534 + 420.903 = $1,589 Mil.
Gross Profit was 72.738 + 73.714 + 59.056 + 39.757 = $245 Mil.
Total Current Assets was $2,257 Mil.
Total Assets was $2,588 Mil.
Property, Plant and Equipment(Net PPE) was $30 Mil.
Depreciation, Depletion and Amortization(DDA) was $4 Mil.
Selling, General & Admin. Expense(SGA) was $204 Mil.
Total Current Liabilities was $235 Mil.
Long-Term Debt was $1,096 Mil.
Net Income was 15.458 + 21.542 + 11.504 + 30.709 = $79 Mil.
Non Operating Income was -5.134 + 4.796 + -5.727 + 43.356 = $37 Mil.
Cash Flow from Operations was -76.984 + 17.976 + -114.248 + -43.689 = $-217 Mil.
Accounts Receivable was $29 Mil.
Revenue was 448 + 416.018 + 331.748 + 390.865 = $1,587 Mil.
Gross Profit was 92.726 + 86.656 + 57.672 + 64.968 = $302 Mil.
Total Current Assets was $2,238 Mil.
Total Assets was $2,528 Mil.
Property, Plant and Equipment(Net PPE) was $32 Mil.
Depreciation, Depletion and Amortization(DDA) was $4 Mil.
Selling, General & Admin. Expense(SGA) was $207 Mil.
Total Current Liabilities was $252 Mil.
Long-Term Debt was $1,095 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)
=(24.958 / 1589.101) / (29.488 / 1586.631)
=0.01570574 / 0.01858529
=0.8451

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)
=(73.714 / 1586.631) / (72.738 / 1589.101)
=0.19035428 / 0.15434198
=1.2333

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 - (2256.947 + 30.21) / 2588.215) / (1 - (2237.69 + 31.608) / 2528.081)
=0.11631878 / 0.10236341
=1.1363

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
=1589.101 / 1586.631
=1.0016

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))
=(4.018 / (4.018 + 31.608)) / (3.832 / (3.832 + 30.21))
=0.1127828 / 0.11256683
=1.0019

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)
=(204.072 / 1589.101) / (207.022 / 1586.631)
=0.12841978 / 0.13047898
=0.9842

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)
=((1096.269 + 234.589) / 2588.215) / ((1095.421 + 252.228) / 2528.081)
=0.51419917 / 0.53307192
=0.9646

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
=(79.213 - 37.291 - -216.945) / 2588.215
=0.1

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 -1.96 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 2.69153.55321.09040.38273.4490.2830.79482.01761.35690.5898
GMI 0.78630.96870.7951.42241.11770.72510.95551.24971.13460.8626
AQI 0.87913.75950.62991.49520.13832.8481.10550.75954.28881.1028
SGI 1.37291.21830.98310.61090.49710.61611.06720.88061.36961.4091
DEPI 1.31590.92261.12261.10652.66581.57090.99710.82781.18741.143
SGAI 1.13160.96995.9611.21741.23391.16790.98460.95990.59570.9047
LVGI 1.01490.98530.92321.121.12490.99111.09970.86770.97721.0231
TATA 0.14880.2459-0.0094-0.1701-0.2271-0.07330.05640.01110.07520.2153
M-score -0.052.31-3.53-3.83-1.91-3.18-2.36-1.530.03-1.49

M D C Holdings Inc Quarterly Data

Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14
DSRI 4.98682.71031.35690.6190.56280.52620.59440.76720.66980.8451
GMI 1.19681.17861.13461.04440.90880.80430.89460.92391.08261.2333
AQI 2.40443.61394.28881.17261.63890.97421.10281.86021.16281.1363
SGI 1.03751.18251.36961.51231.61541.56681.39831.23191.10921.0016
DEPI 0.98271.09281.18741.21671.25431.21511.1431.14391.07691.0019
SGAI 0.72740.62230.59570.6420.69670.8050.91170.95520.98170.9842
LVGI 0.86350.89920.97721.09280.98791.01541.02310.89020.94470.9646
TATA 0.00850.03370.07490.09370.20620.23430.2080.23540.10960.1
M-score 2.020.670.03-1.79-1.07-1.37-1.51-1.02-2.03-1.96
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