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M D C Holdings Inc (NYSE:MDC)
Beneish M-Score
-2.06 (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 -2.06 signals that the company is a manipulator.

MDC' s 10-Year Beneish M-Score Range
Min: -5.31   Max: 3.19
Current: -2.06

-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 -1.93.


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 * 0.8206+0.528 * 0.9722+0.404 * 1.1363+0.892 * 1.0314+0.115 * 1.0019
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9558+4.679 * 0.1065-0.327 * 0.9646
=-2.06

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

This Year (Sep14) TTM:Last Year (Sep13) TTM:
Accounts Receivable was $25 Mil.
Revenue was 418.403 + 431.261 + 318.534 + 420.903 = $1,589 Mil.
Gross Profit was 72.738 + 73.714 + 59.056 + 58.901 = $264 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.
Net Income was 15.458 + 21.542 + 11.504 + 30.709 = $79 Mil.
Non Operating Income was -5.134 + 4.796 + -5.727 + 26.668 = $21 Mil.
Cash Flow from Operations was -76.984 + 17.976 + -114.248 + -43.689 = $-217 Mil.
Accounts Receivable was $29 Mil.
Revenue was 448 + 402.134 + 331.748 + 358.891 = $1,541 Mil.
Gross Profit was 85.805 + 72.772 + 57.672 + 32.994 = $249 Mil.
Total Current Assets was $2,238 Mil.
Total Assets was $2,528 Mil.
Property, Plant and Equipment(Net PPE) was $32 Mil.
Depreciation, Depletion and Amortization(DDA) was $4 Mil.
Selling, General & Admin. Expense(SGA) was $207 Mil.
Total Current Liabilities was $252 Mil.
Long-Term Debt was $1,095 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)
=(24.958 / 1589.101) / (29.488 / 1540.773)
=0.01570574 / 0.01913845
=0.8206

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)
=(73.714 / 1540.773) / (72.738 / 1589.101)
=0.16176491 / 0.16638905
=0.9722

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 - (2256.947 + 30.21) / 2588.215) / (1 - (2237.69 + 31.608) / 2528.081)
=0.11631878 / 0.10236341
=1.1363

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
=1589.101 / 1540.773
=1.0314

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))
=(4.018 / (4.018 + 31.608)) / (3.832 / (3.832 + 30.21))
=0.1127828 / 0.11256683
=1.0019

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)
=(204.072 / 1589.101) / (207.022 / 1540.773)
=0.12841978 / 0.13436243
=0.9558

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)
=((1096.269 + 234.589) / 2588.215) / ((1095.421 + 252.228) / 2528.081)
=0.51419917 / 0.53307192
=0.9646

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
=(79.213 - 20.603 - -216.945) / 2588.215
=0.1065

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 -2.06 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 2.68894.19930.92351.66430.23510.95430.82212.87190.92170.5898
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 -1.022.16-2.38-2.76-5.29-3.34-2.22-0.35-1.75-1.31

M D C Holdings Inc Quarterly Data

Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14
DSRI 4.74792.51060.92790.60750.57330.55040.59550.76930.6550.8206
GMI 0.73530.52170.88240.84460.96451.02610.85910.89260.92670.9722
AQI 2.40443.61391.2251.17261.63890.97421.51721.86021.16281.1363
SGI 1.08971.27661.40561.54091.58581.49791.39561.22851.13431.0314
DEPI 0.98271.09281.18771.21671.25431.21511.1431.14391.07691.0019
SGAI 0.72710.6550.66450.71090.78620.89710.91350.95780.960.9558
LVGI 0.86350.89921.02731.09280.98791.01540.97320.89020.94470.9646
TATA -0.00570.03630.06870.08790.19630.21620.20990.23710.11350.1065
M-score 1.540.23-1.76-1.92-1.12-1.40-1.34-1.03-2.09-2.06
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