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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.
During the past 8 years, the highest Beneish M-Score of Douglas Dynamics Inc was -1.97. The lowest was -2.93. And the median was -2.60.
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 Douglas Dynamics 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 * 0.882||+||0.528 * 1.0219||+||0.404 * 0.9523||+||0.892 * 1.3616||+||0.115 * 1.1944|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.8851||+||4.679 * -0.026||-||0.327 * 1.2415|
|This Year (Jun15) TTM:||Last Year (Jun14) TTM:|
|Accounts Receivable was $61.6 Mil.|
Revenue was 107.143 + 53.89 + 100.054 + 78.836 = $339.9 Mil.
Gross Profit was 37.01 + 16.437 + 38.696 + 29.09 = $121.2 Mil.
Total Current Assets was $144.7 Mil.
Total Assets was $480.8 Mil.
Property, Plant and Equipment(Net PPE) was $38.5 Mil.
Depreciation, Depletion and Amortization(DDA) was $10.8 Mil.
Selling, General & Admin. Expense(SGA) was $44.2 Mil.
Total Current Liabilities was $39.9 Mil.
Long-Term Debt was $185.7 Mil.
Net Income was 13.104 + 0.383 + 13.031 + 10.762 = $37.3 Mil.
Non Operating Income was -0.069 + -0.06 + -1.955 + -0.053 = $-2.1 Mil.
Cash Flow from Operations was -0.895 + 11.326 + 71.88 + -30.39 = $51.9 Mil.
|Accounts Receivable was $51.3 Mil.
Revenue was 88.225 + 36.396 + 72.997 + 52.026 = $249.6 Mil.
Gross Profit was 34.415 + 14.125 + 27.402 + 15.044 = $91.0 Mil.
Total Current Assets was $102.0 Mil.
Total Assets was $365.2 Mil.
Property, Plant and Equipment(Net PPE) was $25.8 Mil.
Depreciation, Depletion and Amortization(DDA) was $9.1 Mil.
Selling, General & Admin. Expense(SGA) was $36.7 Mil.
Total Current Liabilities was $28.4 Mil.
Long-Term Debt was $109.5 Mil.
1. DSRI = Days Sales in Receivables Index
A large increase in DSR could be indicative of revenue inflation.
|DSRI||=||(Receivables_t / Revenue_t)||/||(Receivables_t-1 / Revenue_t-1)|
|=||(61.61 / 339.923)||/||(51.299 / 249.644)|
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.
|=||(GrossProfit_t-1 / Revenue_t-1)||/||(GrossProfit_t / Revenue_t)|
|=||(16.437 / 249.644)||/||(37.01 / 339.923)|
3. AQI = Asset Quality Index
AQI is the ratio of asset quality in year t to year t-1.
|AQI||=||(1 - (CurrentAssets_t + PPE_t) / TotalAssets_t)||/||(1 - (CurrentAssets_t-1 + PPE_t-1) / TotalAssets_t-1)|
|=||(1 - (144.697 + 38.514) / 480.841)||/||(1 - (102.033 + 25.806) / 365.247)|
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.
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))|
|=||(9.118 / (9.118 + 25.806))||/||(10.774 / (10.774 + 38.514))|
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)|
|=||(44.209 / 339.923)||/||(36.683 / 249.644)|
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)|
|=||((185.657 + 39.853) / 480.841)||/||((109.537 + 28.44) / 365.247)|
8. TATA = Total Accruals to Total Assets
Total accruals calculated as the change in working capital accounts other than cash less depreciation.
|=||(NetIncome_t - NonOperatingIncome_t||-||CashFlowsfromOperations_t)||/||TotalAssets_t|
|=||(37.28 - -2.137||-||51.921)||/||480.841|
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.
Douglas Dynamics Inc has a M-score of -2.43 suggests that the company will not be a manipulator.
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
Douglas Dynamics Inc Annual Data
Douglas Dynamics Inc Quarterly Data