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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 -2.51.
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 * 0.8892||+||0.528 * 1.0902||+||0.404 * 0.9701||+||0.892 * 1.3805||+||0.115 * 1.2024|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9872||+||4.679 * -0.0302||-||0.327 * 1.1655|
|This Year (Sep15) TTM:||Last Year (Sep14) TTM:|
|Accounts Receivable was $118.5 Mil.|
Revenue was 120.565 + 107.143 + 53.89 + 100.054 = $381.7 Mil.
Gross Profit was 40.865 + 37.01 + 16.437 + 38.696 = $133.0 Mil.
Total Current Assets was $185.6 Mil.
Total Assets was $521.8 Mil.
Property, Plant and Equipment(Net PPE) was $41.1 Mil.
Depreciation, Depletion and Amortization(DDA) was $11.5 Mil.
Selling, General & Admin. Expense(SGA) was $47.6 Mil.
Total Current Liabilities was $70.0 Mil.
Long-Term Debt was $185.3 Mil.
Net Income was 15.548 + 13.104 + 0.383 + 13.031 = $42.1 Mil.
Non Operating Income was -0.06 + -0.069 + -0.06 + -1.955 = $-2.1 Mil.
Cash Flow from Operations was -22.353 + -0.895 + 11.326 + 71.88 = $60.0 Mil.
|Accounts Receivable was $96.6 Mil.
Revenue was 78.836 + 88.225 + 36.396 + 72.997 = $276.5 Mil.
Gross Profit was 29.09 + 34.415 + 14.125 + 27.402 = $105.0 Mil.
Total Current Assets was $143.0 Mil.
Total Assets was $404.4 Mil.
Property, Plant and Equipment(Net PPE) was $25.6 Mil.
Depreciation, Depletion and Amortization(DDA) was $9.2 Mil.
Selling, General & Admin. Expense(SGA) was $35.0 Mil.
Total Current Liabilities was $60.4 Mil.
Long-Term Debt was $109.3 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)|
|=||(118.538 / 381.652)||/||(96.569 / 276.454)|
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)|
|=||(37.01 / 276.454)||/||(40.865 / 381.652)|
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 - (185.589 + 41.073) / 521.843)||/||(1 - (142.956 + 25.639) / 404.389)|
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))|
|=||(9.178 / (9.178 + 25.639))||/||(11.533 / (11.533 + 41.073))|
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)|
|=||(47.642 / 381.652)||/||(34.956 / 276.454)|
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)|
|=||((185.25 + 70.038) / 521.843)||/||((109.295 + 60.444) / 404.389)|
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|
|=||(42.066 - -2.144||-||59.958)||/||521.843|
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 -2.38 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