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M D C Holdings Inc (NYSE:MDC)
Beneish M-Score
-1.67 (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 -1.67 signals that the company is a manipulator.

MDC' s 10-Year Beneish M-Score Range
Min: -5.29   Max: 2.44
Current: -1.67

-5.29
2.44

During the past 13 years, the highest Beneish M-Score of M D C Holdings Inc was 2.44. The lowest was -5.29. And the median was -1.78.


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 * 1.2055+0.528 * 1.0504+0.404 * 1.0328+0.892 * 1.012+0.115 * 0.9643
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9417+4.679 * 0.1129-0.327 * 0.8998
=-1.67

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

This Year (Dec14) TTM:Last Year (Dec13) TTM:
Accounts Receivable was $29 Mil.
Revenue was 505.672 + 418.403 + 431.261 + 318.534 = $1,674 Mil.
Gross Profit was 108.961 + 72.738 + 73.714 + 59.056 = $314 Mil.
Total Current Assets was $2,009 Mil.
Total Assets was $2,358 Mil.
Property, Plant and Equipment(Net PPE) was $30 Mil.
Depreciation, Depletion and Amortization(DDA) was $4 Mil.
Selling, General & Admin. Expense(SGA) was $203 Mil.
Total Current Liabilities was $284 Mil.
Long-Term Debt was $846 Mil.
Net Income was 14.639 + 15.458 + 21.542 + 11.504 = $63 Mil.
Non Operating Income was -33.354 + -5.134 + 4.796 + -5.727 = $-39 Mil.
Cash Flow from Operations was 9.609 + -76.984 + 17.976 + -114.248 = $-164 Mil.
Accounts Receivable was $23 Mil.
Revenue was 472.162 + 448 + 402.134 + 331.748 = $1,654 Mil.
Gross Profit was 110.16 + 85.805 + 72.772 + 57.672 = $326 Mil.
Total Current Assets was $2,225 Mil.
Total Assets was $2,595 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 $287 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)
=(28.555 / 1673.87) / (23.407 / 1654.044)
=0.01705927 / 0.01415138
=1.2055

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)
=(72.738 / 1654.044) / (108.961 / 1673.87)
=0.19733997 / 0.18786943
=1.0504

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 - (2009.296 + 30.491) / 2358.438) / (1 - (2224.668 + 31.248) / 2595.449)
=0.13511104 / 0.1308186
=1.0328

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
=1673.87 / 1654.044
=1.012

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))
=(3.864 / (3.864 + 31.248)) / (3.928 / (3.928 + 30.491))
=0.11004785 / 0.11412301
=0.9643

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)
=(203.252 / 1673.87) / (213.283 / 1654.044)
=0.1214264 / 0.12894639
=0.9417

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)
=((846.45 + 283.652) / 2358.438) / ((1095.62 + 286.58) / 2595.449)
=0.47917393 / 0.53254755
=0.8998

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
=(63.143 - -39.419 - -163.647) / 2358.438
=0.1129

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 -1.67 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 4.19930.92351.66430.23510.95430.79482.08471.31320.57181.2097
GMI 0.98061.2431.54871.02650.72510.95551.66460.85180.75581.0579
AQI 1.91251.23821.12280.56890.94111.08331.93281.2251.51721.0328
SGI 1.21920.98140.6010.50530.61611.06720.85231.41511.45351.0084
DEPI 1.12190.92321.10652.66581.57090.99710.82751.18771.1430.9643
SGAI 0.99381.10961.23751.1871.19440.98450.86640.66010.87710.945
LVGI 1.00570.90451.14091.10420.99111.09970.86771.02730.97320.8998
TATA 0.2411-0.0094-0.1703-0.3475-0.07330.0566-0.00960.07510.23620.1172
M-score 2.16-2.38-2.76-5.29-3.34-2.36-0.88-1.39-1.24-1.65

M D C Holdings Inc Quarterly Data

Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14Dec14
DSRI 2.60951.32210.60750.57330.55040.57710.74530.63490.7951.2055
GMI 0.88280.88240.84460.96451.02610.74740.77730.8070.84061.0504
AQI 3.61391.2251.17261.63890.97421.51721.86021.16281.13631.0328
SGI 1.22821.40561.54091.58581.49791.44031.26811.17021.06461.012
DEPI 1.09281.18771.21671.25431.21511.1431.14391.07691.00190.9643
SGAI 0.60560.66450.71090.78620.89710.88520.92790.93060.92590.9417
LVGI 0.89921.02731.09280.98791.01540.97320.89020.94470.96460.8998
TATA 0.03630.06870.08790.19630.21620.23070.25840.13430.12740.1129
M-score 0.48-1.40-1.92-1.12-1.40-1.28-0.97-2.03-2.02-1.67
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