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M D C Holdings Inc (NYSE:MDC)
Beneish M-Score
-2.14 (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 -2.14 signals that the company is a manipulator.

MDC' s Beneish M-Score Range Over the Past 10 Years
Min: -5.31   Max: 3.19
Current: -2.14

-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 -2.02.


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 * 1.0293+0.528 * 1.0422+0.404 * 1.0867+0.892 * 1.1129+0.115 * 0.8981
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9571+4.679 * 0.0274-0.327 * 0.9168
=-2.14

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

This Year (Sep15) TTM:Last Year (Sep14) TTM:
Accounts Receivable was $29 Mil.
Revenue was 468.487 + 473.128 + 377.919 + 461.719 = $1,781 Mil.
Gross Profit was 81.905 + 83.902 + 57.802 + 65.008 = $289 Mil.
Total Current Assets was $2,025 Mil.
Total Assets was $2,351 Mil.
Property, Plant and Equipment(Net PPE) was $28 Mil.
Depreciation, Depletion and Amortization(DDA) was $4 Mil.
Selling, General & Admin. Expense(SGA) was $217 Mil.
Total Current Liabilities was $261 Mil.
Long-Term Debt was $847 Mil.
Net Income was 14.778 + 19.998 + 8.42 + 14.639 = $58 Mil.
Non Operating Income was -2.526 + -1.055 + 3.298 + 10.599 = $10 Mil.
Cash Flow from Operations was -70.995 + 29.083 + 15.426 + 9.609 = $-17 Mil.
Accounts Receivable was $25 Mil.
Revenue was 418.403 + 442.752 + 318.534 + 420.903 = $1,601 Mil.
Gross Profit was 72.738 + 79.59 + 59.056 + 58.901 = $270 Mil.
Total Current Assets was $2,257 Mil.
Total Assets was $2,588 Mil.
Property, Plant and Equipment(Net PPE) was $30 Mil.
Depreciation, Depletion and Amortization(DDA) was $4 Mil.
Selling, General & Admin. Expense(SGA) was $204 Mil.
Total Current Liabilities was $235 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)
=(28.588 / 1781.253) / (24.958 / 1600.592)
=0.01604938 / 0.01559298
=1.0293

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)
=(83.902 / 1600.592) / (81.905 / 1781.253)
=0.16886564 / 0.16203032
=1.0422

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 - (2025.224 + 28.499) / 2350.868) / (1 - (2256.947 + 30.21) / 2588.215)
=0.12639799 / 0.11631878
=1.0867

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
=1781.253 / 1600.592
=1.1129

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))
=(3.832 / (3.832 + 30.21)) / (4.084 / (4.084 + 28.499))
=0.11256683 / 0.12534144
=0.8981

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)
=(217.358 / 1781.253) / (204.072 / 1600.592)
=0.12202534 / 0.12749783
=0.9571

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)
=((846.907 + 261.351) / 2350.868) / ((1096.269 + 234.589) / 2588.215)
=0.47142502 / 0.51419917
=0.9168

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
=(57.835 - 10.316 - -16.877) / 2350.868
=0.0274

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 -2.14 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 4.19930.92351.66430.23510.95430.79482.97020.92170.58981.2041
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 2.16-2.38-2.76-5.29-3.34-2.36-0.07-1.75-1.30-1.74

M D C Holdings Inc Quarterly Data

Jun13Sep13Dec13Mar14Jun14Sep14Dec14Mar15Jun15Sep15
DSRI 0.56660.54470.590.7630.65040.81471.19121.06680.93721.0293
GMI 0.86920.89290.85540.88970.94741.00971.01951.07541.07681.0422
AQI 1.63891.33621.51721.8641.16280.82851.03281.07231.14451.0867
SGI 1.60471.51351.40861.23861.14231.03881.02411.071.06191.1129
DEPI 1.25431.21511.1431.12311.07691.00190.96430.89250.86720.8981
SGAI 0.7770.88780.90510.950.95330.94890.93050.89970.93770.9571
LVGI 0.98791.01540.97320.91710.94470.96460.89980.89510.95810.9168
TATA 0.19960.22160.2110.23830.11690.10980.09670.03730.03130.0274
M-score -1.14-1.29-1.33-1.03-2.05-2.15-1.77-2.07-2.23-2.14
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