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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 -2.24. The lowest was -2.83. And the median was -2.52.
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 * 0.9211||+||0.528 * 0.8815||+||0.404 * 0.9448||+||0.892 * 1.5619||+||0.115 * 1.3133|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.7681||+||4.679 * -0.0243||-||0.327 * 1.2049|
|This Year (Dec14) TTM:||Last Year (Dec13) TTM:|
|Accounts Receivable was $60.9 Mil.|
Revenue was 100.054 + 78.836 + 88.225 + 36.396 = $303.5 Mil.
Gross Profit was 38.696 + 29.09 + 34.415 + 14.125 = $116.3 Mil.
Total Current Assets was $142.5 Mil.
Total Assets was $480.4 Mil.
Property, Plant and Equipment(Net PPE) was $37.5 Mil.
Depreciation, Depletion and Amortization(DDA) was $9.2 Mil.
Selling, General & Admin. Expense(SGA) was $38.2 Mil.
Total Current Liabilities was $45.7 Mil.
Long-Term Debt was $186.5 Mil.
Net Income was 13.031 + 10.762 + 14.593 + 1.575 = $40.0 Mil.
Non Operating Income was -1.955 + -0.053 + -0.065 + -0.018 = $-2.1 Mil.
Cash Flow from Operations was 71.88 + -30.39 + 2.033 + 10.224 = $53.7 Mil.
|Accounts Receivable was $42.3 Mil.
Revenue was 72.997 + 52.026 + 55.156 + 14.141 = $194.3 Mil.
Gross Profit was 27.402 + 15.044 + 18.878 + 4.326 = $65.7 Mil.
Total Current Assets was $98.4 Mil.
Total Assets was $364.3 Mil.
Property, Plant and Equipment(Net PPE) was $24.9 Mil.
Depreciation, Depletion and Amortization(DDA) was $8.7 Mil.
Selling, General & Admin. Expense(SGA) was $31.9 Mil.
Total Current Liabilities was $36.1 Mil.
Long-Term Debt was $110.0 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)|
|=||(60.918 / 303.511)||/||(42.343 / 194.32)|
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)|
|=||(29.09 / 194.32)||/||(38.696 / 303.511)|
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 - (142.521 + 37.546) / 480.443)||/||(1 - (98.372 + 24.866) / 364.339)|
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))|
|=||(8.693 / (8.693 + 24.866))||/||(9.225 / (9.225 + 37.546))|
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)|
|=||(38.239 / 303.511)||/||(31.872 / 194.32)|
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)|
|=||((186.471 + 45.694) / 480.443)||/||((110.023 + 36.098) / 364.339)|
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|
|=||(39.961 - -2.091||-||53.747)||/||480.443|
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 -2.24 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