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M D C Holdings Inc (NYSE:MDC)
Beneish M-Score
-2.20 (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 -2.20 signals that the company is a manipulator.

MDC' s 10-Year Beneish M-Score Range
Min: -5.31   Max: 3.19
Current: -2.2

-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 -1.98.


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 * 0.9411+0.528 * 1.0864+0.404 * 1.1445+0.892 * 1.0575+0.115 * 0.8672
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9416+4.679 * 0.0357-0.327 * 0.9581
=-2.20

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

This Year (Jun15) TTM:Last Year (Jun14) TTM:
Accounts Receivable was $27 Mil.
Revenue was 473.128 + 377.919 + 493.132 + 407.704 = $1,752 Mil.
Gross Profit was 83.902 + 57.802 + 80.239 + 67.682 = $290 Mil.
Total Current Assets was $2,008 Mil.
Total Assets was $2,352 Mil.
Property, Plant and Equipment(Net PPE) was $29 Mil.
Depreciation, Depletion and Amortization(DDA) was $4 Mil.
Selling, General & Admin. Expense(SGA) was $210 Mil.
Total Current Liabilities was $269 Mil.
Long-Term Debt was $847 Mil.
Net Income was 19.998 + 8.42 + 14.639 + 15.458 = $59 Mil.
Non Operating Income was -1.055 + 3.298 + -4.632 + -0.078 = $-2 Mil.
Cash Flow from Operations was 29.083 + 15.426 + 9.609 + -76.984 = $-23 Mil.
Accounts Receivable was $27 Mil.
Revenue was 442.752 + 318.534 + 461.575 + 433.718 = $1,657 Mil.
Gross Profit was 79.59 + 59.056 + 80.429 + 78.444 = $298 Mil.
Total Current Assets was $2,262 Mil.
Total Assets was $2,597 Mil.
Property, Plant and Equipment(Net PPE) was $31 Mil.
Depreciation, Depletion and Amortization(DDA) was $4 Mil.
Selling, General & Admin. Expense(SGA) was $211 Mil.
Total Current Liabilities was $190 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)
=(27.12 / 1751.883) / (27.25 / 1656.579)
=0.01548049 / 0.01644956
=0.9411

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)
=(57.802 / 1656.579) / (83.902 / 1751.883)
=0.17959844 / 0.16532211
=1.0864

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 - (2007.924 + 29.101) / 2351.936) / (1 - (2261.638 + 31.157) / 2596.561)
=0.13389437 / 0.11698782
=1.1445

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
=1751.883 / 1656.579
=1.0575

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))
=(3.725 / (3.725 + 31.157)) / (4.087 / (4.087 + 29.101))
=0.1067886 / 0.12314692
=0.8672

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)
=(210.426 / 1751.883) / (211.313 / 1656.579)
=0.12011419 / 0.12755987
=0.9416

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)
=((846.752 + 268.959) / 2351.936) / ((1096.112 + 189.556) / 2596.561)
=0.47437983 / 0.49514261
=0.9581

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
=(58.515 - -2.467 - -22.866) / 2351.936
=0.0357

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 -2.20 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

Mar13Jun13Sep13Dec13Mar14Jun14Sep14Dec14Mar15Jun15
DSRI 0.60390.55940.53130.58980.76120.64830.8091.19581.07150.9411
GMI 0.81830.84440.830.86260.8910.94380.99921.031.08541.0864
AQI 1.17261.63890.97421.51721.8641.16281.13631.03281.07231.1445
SGI 1.55011.62531.55171.40911.24151.14611.04631.02021.06531.0575
DEPI 1.21671.25431.21511.1431.12311.07691.00190.96430.89250.8672
SGAI 0.70670.76710.8660.90470.94780.95010.94220.93410.90360.9416
LVGI 1.09280.98791.01540.97320.91710.94470.96460.89980.89510.9581
TATA 0.09360.20360.2260.21640.24380.12230.11620.1010.04170.0357
M-score -1.90-1.13-1.42-1.30-1.00-2.03-1.99-1.74-2.05-2.20
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