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M.D.C. Holdings, Inc. (NYSE:MDC)
Beneish M-Score
-1.34 (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 -1.34 signals that the company is a manipulator.

MDC' s 10-Year Beneish M-Score Range
Min: -3.04   Max: 2.44
Current: -1.34

-3.04
2.44

During the past 13 years, the highest Beneish M-Score of M.D.C. Holdings, Inc. was 2.44. The lowest was -3.04. And the median was -2.16.


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 * 0.5904+0.528 * 0.8614+0.404 * 1.5172+0.892 * 1.4077+0.115 * 1.143
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9056+4.679 * 0.208-0.327 * 0.9732
=-1.34

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

This Year (Dec13) TTM:Last Year (Dec12) TTM:
Accounts Receivable was $23 Mil.
Revenue was 420.903 + 448 + 416.018 + 331.748 = $1,617 Mil.
Gross Profit was 39.757 + 92.726 + 86.656 + 57.672 = $277 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.
Net Income was 30.709 + 36.251 + 224.909 + 22.516 = $314 Mil.
Non Operating Income was 43.356 + -7.409 + 1.33 + 6.875 = $44 Mil.
Cash Flow from Operations was -43.689 + -79.617 + -90.825 + -55.418 = $-270 Mil.
Accounts Receivable was $28 Mil.
Revenue was 358.891 + 334.33 + 268.934 + 186.268 = $1,148 Mil.
Gross Profit was 32.994 + 63.261 + 46.996 + 26.124 = $169 Mil.
Total Current Assets was $1,745 Mil.
Total Assets was $1,945 Mil.
Property, Plant and Equipment(Net PPE) was $33 Mil.
Depreciation, Depletion and Amortization(DDA) was $5 Mil.
Selling, General & Admin. Expense(SGA) was $167 Mil.
Total Current Liabilities was $320 Mil.
Long-Term Debt was $745 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)
=(23.407 / 1616.669) / (28.163 / 1148.423)
=0.01447854 / 0.02452319
=0.5904

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)
=(92.726 / 1148.423) / (39.757 / 1616.669)
=0.14748486 / 0.17122305
=0.8614

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 - (2224.668 + 31.248) / 2595.449) / (1 - (1744.576 + 33.125) / 1945.441)
=0.1308186 / 0.0862221
=1.5172

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
=1616.669 / 1148.423
=1.4077

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))
=(4.766 / (4.766 + 33.125)) / (3.864 / (3.864 + 31.248))
=0.12578185 / 0.11004785
=1.143

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)
=(213.283 / 1616.669) / (167.295 / 1148.423)
=0.13192744 / 0.14567368
=0.9056

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)
=((1095.62 + 286.58) / 2595.449) / ((744.842 + 319.702) / 1945.441)
=0.53254755 / 0.54719932
=0.9732

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
=(314.385 - 44.152 - -269.549) / 2595.449
=0.208

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 -1.34 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 2.68894.19930.92351.66432.81211.27790.12041.22420.92170.5898
GMI 0.49670.98061.2431.54871.02650.72511.23891.28380.85180.8626
AQI 0.87911.91251.23821.12280.56890.94111.08331.93281.2251.5172
SGI 1.37421.21920.98140.6010.50530.61611.03180.88151.41511.4091
DEPI 1.31591.12190.92321.10652.66581.57090.99710.82751.18771.143
SGAI 5.93290.99381.10961.23751.1871.19440.92220.92490.66010.9047
LVGI 1.01491.00570.90451.14091.10420.99111.09970.86771.02730.9732
TATA 0.15020.2411-0.0094-0.1703-0.3475-0.07330.0538-0.00960.07510.2153
M-score -1.022.16-2.38-2.76-2.91-3.04-2.87-1.86-1.75-1.31

M.D.C. Holdings, Inc. Quarterly Data

Sep11Dec11Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13
DSRI 0.95171.22421.20032.24931.44320.92790.60750.56780.54550.5904
GMI 2.55991.28721.1320.73530.52170.88240.84460.91770.95560.8614
AQI 0.82261.93282.52932.40443.61391.2251.17261.63890.97421.5172
SGI 0.78770.88150.89011.08971.27661.40561.54091.60131.51141.4077
DEPI 0.72430.82750.90480.98271.09281.18771.21671.25431.21511.143
SGAI 0.97070.92490.86550.72710.6550.66450.71090.77870.8890.9056
LVGI 0.96030.86770.8680.86350.89921.02731.09280.98791.01540.9732
TATA 0.0152-0.0093-0.0189-0.00570.03630.06870.08770.19840.22090.208
M-score -1.90-1.86-1.74-0.76-0.75-1.76-1.92-1.13-1.40-1.34
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