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M.D.C. Holdings Inc (NYSE:MDC)
Beneish M-Score
-2.28 (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 -2.28 suggests that the company is not a manipulator.

MDC' s Beneish M-Score Range Over the Past 10 Years
Min: -5.38   Max: 3.19
Current: -2.28

-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 -2.03.


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 * 1.0082+0.528 * 1.004+0.404 * 0.9043+0.892 * 1.0986+0.115 * 0.9918
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0282+4.679 * 0.0311-0.327 * 1.0044
=-2.28

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

This Year (Mar16) TTM:Last Year (Mar15) TTM:
Accounts Receivable was $38 Mil.
Revenue was 396.744 + 530.101 + 468.487 + 473.128 = $1,868 Mil.
Gross Profit was 65.055 + 70.185 + 81.905 + 83.902 = $301 Mil.
Total Current Assets was $2,068 Mil.
Total Assets was $2,386 Mil.
Property, Plant and Equipment(Net PPE) was $29 Mil.
Depreciation, Depletion and Amortization(DDA) was $4 Mil.
Selling, General & Admin. Expense(SGA) was $232 Mil.
Total Current Liabilities was $226 Mil.
Long-Term Debt was $901 Mil.
Net Income was 9.563 + 22.595 + 14.778 + 19.998 = $67 Mil.
Non Operating Income was 2.804 + 23.776 + -2.526 + -1.055 = $23 Mil.
Cash Flow from Operations was -14.985 + 26.701 + -70.995 + 29.083 = $-30 Mil.
Accounts Receivable was $34 Mil.
Revenue was 377.919 + 461.719 + 418.403 + 442.752 = $1,701 Mil.
Gross Profit was 57.802 + 65.008 + 72.738 + 79.59 = $275 Mil.
Total Current Assets was $1,977 Mil.
Total Assets was $2,316 Mil.
Property, Plant and Equipment(Net PPE) was $30 Mil.
Depreciation, Depletion and Amortization(DDA) was $4 Mil.
Selling, General & Admin. Expense(SGA) was $205 Mil.
Total Current Liabilities was $243 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)
=(38.096 / 1868.46) / (34.397 / 1700.793)
=0.02038898 / 0.0202241
=1.0082

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)
=(70.185 / 1700.793) / (65.055 / 1868.46)
=0.16177042 / 0.16112039
=1.004

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 - (2068.416 + 29.374) / 2385.806) / (1 - (1977.422 + 29.783) / 2316.435)
=0.12072063 / 0.13349392
=0.9043

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
=1868.46 / 1700.793
=1.0986

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))
=(4.077 / (4.077 + 29.783)) / (4.059 / (4.059 + 29.374))
=0.12040756 / 0.12140699
=0.9918

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)
=(232.062 / 1868.46) / (205.443 / 1700.793)
=0.12419961 / 0.12079248
=1.0282

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)
=((901.019 + 226.493) / 2385.806) / ((846.6 + 243.372) / 2316.435)
=0.47259165 / 0.47053856
=1.0044

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
=(66.934 - 22.999 - -30.196) / 2385.806
=0.0311

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 -2.28 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.

M.D.C. Holdings Inc Annual Data

Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15
DSRI 0.92191.63730.2390.95430.79482.87470.95230.58981.20410.7245
GMI 0.7951.42241.11770.72510.95551.24971.13460.86261.04431.0607
AQI 1.23821.12280.56890.94111.08331.93281.2251.51721.06280.9624
SGI 0.98310.61090.49710.61611.06720.88061.36961.40911.01321.127
DEPI 0.92321.10652.66581.57090.99710.82751.18771.1430.96430.9058
SGAI 5.9611.21741.23391.16790.98460.95990.59570.90470.94060.988
LVGI 0.90451.14091.10420.99111.09970.86771.02730.97320.89691.0049
TATA -0.0094-0.1669-0.2271-0.07330.05640.01110.07520.21530.09880.0193
M-score -3.45-2.82-4.69-3.34-2.37-0.27-1.60-1.31-1.73-2.52

M.D.C. Holdings Inc Quarterly Data

Dec13Mar14Jun14Sep14Dec14Mar15Jun15Sep15Dec15Mar16
DSRI 0.590.7630.65040.81471.19121.06680.93721.02930.72451.0082
GMI 0.85540.88970.94741.00971.01951.07541.07681.04221.06011.004
AQI 1.51721.8641.16280.82851.06281.07231.14451.08670.96240.9043
SGI 1.40861.23861.14231.03881.02411.071.06191.11291.12691.0986
DEPI 1.1431.12311.07691.00190.96430.89250.86720.89810.90580.9918
SGAI 0.90510.950.95330.94890.93050.89970.93770.95710.98811.0282
LVGI 0.97320.91710.94470.96460.89690.89510.95810.91681.00491.0044
TATA 0.2110.23830.11690.10980.0970.03730.03130.02740.01740.0311
M-score -1.33-1.03-2.05-2.15-1.75-2.07-2.23-2.14-2.53-2.28
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