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GuruFocus has detected 1 Warning Sign with Universal Forest Products Inc $UFPI.
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Universal Forest Products Inc (NAS:UFPI)
Beneish M-Score
-2.46 (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.

Universal Forest Products Inc has a M-score of -2.46 suggests that the company is not a manipulator.

UFPI' s Beneish M-Score Range Over the Past 10 Years
Min: -3.57   Max: 0.42
Current: -2.46

-3.57
0.42

During the past 13 years, the highest Beneish M-Score of Universal Forest Products Inc was 0.42. The lowest was -3.57. And the median was -2.55.


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 Universal Forest Products 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 * 1.0973+0.528 * 0.9958+0.404 * 0.9831+0.892 * 1.1595+0.115 * 1.0841
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0291+4.679 * -0.0186-0.327 * 1.3725
=-2.46

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

This Year (Mar17) TTM:Last Year (Mar16) TTM:
Accounts Receivable was $366 Mil.
Revenue was 846.13 + 859.584 + 826.665 + 872.093 = $3,404 Mil.
Gross Profit was 120.74 + 122.31 + 118.054 + 131.487 = $493 Mil.
Total Current Assets was $903 Mil.
Total Assets was $1,478 Mil.
Property, Plant and Equipment(Net PPE) was $310 Mil.
Depreciation, Depletion and Amortization(DDA) was $46 Mil.
Selling, General & Admin. Expense(SGA) was $326 Mil.
Total Current Liabilities was $278 Mil.
Long-Term Debt was $253 Mil.
Net Income was 21.062 + 20.75 + 27.819 + 33.398 = $103 Mil.
Non Operating Income was -1.417 + 0.026 + 0.05 + 0.11 = $-1 Mil.
Cash Flow from Operations was -70.74 + 36.143 + 96.336 + 69.998 = $132 Mil.
Accounts Receivable was $287 Mil.
Revenue was 682.151 + 653.601 + 762.275 + 838.171 = $2,936 Mil.
Gross Profit was 102.739 + 97.173 + 110.706 + 112.443 = $423 Mil.
Total Current Assets was $682 Mil.
Total Assets was $1,146 Mil.
Property, Plant and Equipment(Net PPE) was $255 Mil.
Depreciation, Depletion and Amortization(DDA) was $41 Mil.
Selling, General & Admin. Expense(SGA) was $273 Mil.
Total Current Liabilities was $215 Mil.
Long-Term Debt was $85 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)
=(365.62 / 3404.472) / (287.374 / 2936.198)
=0.10739404 / 0.09787283
=1.0973

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)
=(423.061 / 2936.198) / (492.591 / 3404.472)
=0.14408463 / 0.1446894
=0.9958

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 - (903.113 + 309.853) / 1477.659) / (1 - (682.381 + 254.634) / 1145.777)
=0.17912996 / 0.18220125
=0.9831

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
=3404.472 / 2936.198
=1.1595

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))
=(41.447 / (41.447 + 254.634)) / (45.944 / (45.944 + 309.853))
=0.13998534 / 0.12912981
=1.0841

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)
=(326.231 / 3404.472) / (273.398 / 2936.198)
=0.09582426 / 0.09311293
=1.0291

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)
=((252.904 + 277.841) / 1477.659) / ((84.525 + 215.321) / 1145.777)
=0.35917962 / 0.26169665
=1.3725

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
=(103.029 - -1.231 - 131.737) / 1477.659
=-0.0186

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.

Universal Forest Products Inc has a M-score of -2.46 suggests that the company will not 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 local exchange's currency.

Universal Forest Products Inc Annual Data

Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15Dec16
DSRI 1.01961.09011.0381.04461.0421.13690.91961.00821.04871.1278
GMI 1.16491.07990.78181.19761.10961.00050.96460.92860.88290.9458
AQI 0.92531.20960.99611.01941.02610.90120.92370.99030.95060.9786
SGI 0.94320.88830.74941.13020.96381.12761.20221.07691.08521.1224
DEPI 0.92230.91931.05841.05571.03361.06231.05830.97050.90491.1042
SGAI 1.01421.04011.17310.87020.95230.90420.91941.0441.05981.0456
LVGI 0.97090.75330.77150.99040.85781.28940.99741.0970.97421.13
TATA -0.069-0.1032-0.1321-0.0151-0.0090.0344-0.0126-0.0156-0.08-0.0554
M-score -2.78-2.79-3.35-2.25-2.39-2.19-2.46-2.56-2.83-2.59

Universal Forest Products Inc Quarterly Data

Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16Dec16Mar17
DSRI 1.00820.97040.94310.95691.04871.02750.99421.1811.12781.0973
GMI 0.93070.9470.96760.94020.88290.85870.84880.88840.94580.9958
AQI 0.99030.95550.9921.03570.95061.0490.97960.95140.97860.9831
SGI 1.07691.10911.121.11211.08521.07191.0591.06341.12241.1595
DEPI 0.97050.95520.91790.90690.90490.92550.96321.09441.10421.0841
SGAI 1.04391.01971.02121.02891.05981.07371.08091.06651.04561.0291
LVGI 1.0971.1421.06750.98360.97420.75970.86621.19311.131.3725
TATA -0.0156-0.0053-0.0201-0.048-0.08-0.0874-0.0631-0.0647-0.0554-0.0186
M-score -2.56-2.54-2.57-2.67-2.83-2.80-2.79-2.70-2.59-2.46
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