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M D C Holdings Inc (NYSE:MDC)
Beneish M-Score
-2.05 (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 -2.05 signals that the company is a manipulator.

MDC' s 10-Year Beneish M-Score Range
Min: -5.31   Max: 3.19
Current: -2.05

-5.31
3.19

During the past 13 years, the highest Beneish M-Score of M D C Holdings Inc was 3.19. The lowest was -5.31. And the median was -1.96.


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 * 1.0787+0.528 * 1.1009+0.404 * 1.0723+0.892 * 1.0582+0.115 * 0.8925
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9097+4.679 * 0.0391-0.327 * 0.8951
=-2.05

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

This Year (Mar15) TTM:Last Year (Mar14) TTM:
Accounts Receivable was $34 Mil.
Revenue was 377.919 + 493.132 + 407.704 + 431.261 = $1,710 Mil.
Gross Profit was 57.802 + 80.239 + 67.682 + 73.714 = $279 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.
Net Income was 8.42 + 14.639 + 15.458 + 21.542 = $60 Mil.
Non Operating Income was 3.298 + -4.632 + -0.078 + 4.796 = $3 Mil.
Cash Flow from Operations was 15.426 + 9.609 + -76.984 + 17.976 = $-34 Mil.
Accounts Receivable was $30 Mil.
Revenue was 318.534 + 461.575 + 433.718 + 402.134 = $1,616 Mil.
Gross Profit was 59.056 + 80.429 + 78.444 + 72.772 = $291 Mil.
Total Current Assets was $2,202 Mil.
Total Assets was $2,550 Mil.
Property, Plant and Equipment(Net PPE) was $31 Mil.
Depreciation, Depletion and Amortization(DDA) was $4 Mil.
Selling, General & Admin. Expense(SGA) was $213 Mil.
Total Current Liabilities was $245 Mil.
Long-Term Debt was $1,096 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)
=(34.397 / 1710.016) / (30.134 / 1615.961)
=0.02011502 / 0.01864773
=1.0787

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)
=(80.239 / 1615.961) / (57.802 / 1710.016)
=0.17989357 / 0.16341192
=1.1009

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 - (1977.422 + 29.783) / 2316.435) / (1 - (2201.844 + 30.897) / 2550.237)
=0.13349392 / 0.12449666
=1.0723

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
=1710.016 / 1615.961
=1.0582

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))
=(3.72 / (3.72 + 30.897)) / (4.077 / (4.077 + 29.783))
=0.10746165 / 0.12040756
=0.8925

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)
=(205.443 / 1710.016) / (213.423 / 1615.961)
=0.12014098 / 0.13207188
=0.9097

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)
=((846.6 + 243.372) / 2316.435) / ((1095.958 + 244.59) / 2550.237)
=0.47053856 / 0.52565624
=0.8951

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
=(60.059 - 3.384 - -33.973) / 2316.435
=0.0391

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 -2.05 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

Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14
DSRI 4.19930.92351.66430.23510.95430.79482.08471.31320.58981.2041
GMI 0.98061.2431.54871.02650.72510.95551.66460.85180.86261.0443
AQI 1.91251.23821.12280.56890.94111.08331.93281.2251.51721.0328
SGI 1.21920.98140.6010.50530.61611.06720.85231.41511.40911.0132
DEPI 1.12190.92321.10652.66581.57090.99710.82751.18771.1430.9643
SGAI 0.99381.10961.23751.1871.19440.98450.86640.66010.90470.9406
LVGI 1.00570.90451.14091.10420.99111.09970.86771.02730.97320.8998
TATA 0.2411-0.0094-0.1703-0.3475-0.07330.0566-0.00960.07510.21640.0986
M-score 2.16-2.38-2.76-5.29-3.34-2.36-0.88-1.39-1.30-1.74

M D C Holdings Inc Quarterly Data

Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14Dec14Mar15
DSRI 1.31320.60390.55940.53130.58980.76120.65280.81471.20411.0787
GMI 0.84960.81830.84440.830.86260.8910.95611.01291.04431.1009
AQI 1.2251.17261.63890.97421.51721.8641.16281.13631.03281.0723
SGI 1.41511.55011.62531.55171.40911.24151.13811.03891.01321.0582
DEPI 1.18771.21671.25431.21511.1431.12311.07691.00190.96430.8925
SGAI 0.66010.70670.76710.8660.90470.94780.95680.94880.94060.9097
LVGI 1.02731.09280.98791.01540.97320.91710.94470.96460.89980.8951
TATA 0.07510.09360.20360.2260.21640.24380.12010.11390.09860.0391
M-score -1.39-1.90-1.13-1.42-1.30-1.00-2.04-2.00-1.74-2.05
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