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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.
Douglas Dynamics Inc has a M-score of -2.92 suggests that the company is not a manipulator.
During the past 7 years, the highest Beneish M-Score of Douglas Dynamics Inc was -0.65. The lowest was -2.92. And the median was -2.71.
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 * 0.5778||+||0.528 * 0.916||+||0.404 * 1.0035||+||0.892 * 1.4873||+||0.115 * 1.0964|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0891||+||4.679 * -0.0952||-||0.327 * 0.9889|
|This Year (Mar14) TTM:||Last Year (Mar13) TTM:|
|Accounts Receivable was $16.8 Mil.|
Revenue was 36.396 + 72.997 + 52.026 + 55.156 = $216.6 Mil.
Gross Profit was 14.125 + 27.402 + 15.044 + 18.878 = $75.4 Mil.
Total Current Assets was $79.8 Mil.
Total Assets was $345.2 Mil.
Property, Plant and Equipment(Net PPE) was $25.3 Mil.
Depreciation, Depletion and Amortization(DDA) was $9.0 Mil.
Selling, General & Admin. Expense(SGA) was $34.3 Mil.
Total Current Liabilities was $18.1 Mil.
Long-Term Debt was $109.8 Mil.
Net Income was 1.575 + 8.531 + 0.603 + 5.909 = $16.6 Mil.
Non Operating Income was -0.018 + -0.044 + -0.04 + -0.046 = $-0.1 Mil.
Cash Flow from Operations was 10.224 + 58.97 + -14.892 + -4.682 = $49.6 Mil.
|Accounts Receivable was $19.5 Mil.
Revenue was 14.141 + 28.2 + 37.774 + 65.499 = $145.6 Mil.
Gross Profit was 4.326 + 7.517 + 11.566 + 23.06 = $46.5 Mil.
Total Current Assets was $80.8 Mil.
Total Assets was $328.1 Mil.
Property, Plant and Equipment(Net PPE) was $20.0 Mil.
Depreciation, Depletion and Amortization(DDA) was $8.0 Mil.
Selling, General & Admin. Expense(SGA) was $21.2 Mil.
Total Current Liabilities was $12.2 Mil.
Long-Term Debt was $110.8 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)|
|=||(16.775 / 216.575)||/||(19.519 / 145.614)|
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)|
|=||(27.402 / 145.614)||/||(14.125 / 216.575)|
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 - (79.847 + 25.332) / 345.23)||/||(1 - (80.759 + 20.013) / 328.13)|
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))|
|=||(8.032 / (8.032 + 20.013))||/||(8.957 / (8.957 + 25.332))|
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)|
|=||(34.299 / 216.575)||/||(21.175 / 145.614)|
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)|
|=||((109.78 + 18.124) / 345.23)||/||((110.752 + 12.178) / 328.13)|
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|
|=||(16.618 - -0.148||-||49.62)||/||345.23|
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 -2.92 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