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GuruFocus has detected 2 Warning Signs with Universal Forest Products Inc $UFPI.
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Universal Forest Products Inc (NAS:UFPI)
Beneish M-Score
-2.59 (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 -2.59 suggests that the company is not a manipulator.

UFPI' s Beneish M-Score Range Over the Past 10 Years
Min: -3.35   Max: 0.42
Current: -2.59

-3.35
0.42

During the past 13 years, the highest Beneish M-Score of Universal Forest Products Inc was 0.42. The lowest was -3.35. And the median was -2.45.


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 * 1.1278+0.528 * 0.9458+0.404 * 0.9786+0.892 * 1.1224+0.115 * 1.1042
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0456+4.679 * -0.0554-0.327 * 1.13
=-2.59

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

This Year (Dec16) TTM:Last Year (Dec15) TTM:
Accounts Receivable was $282 Mil.
Revenue was 859.584 + 826.665 + 872.093 + 682.151 = $3,240 Mil.
Gross Profit was 122.31 + 118.054 + 131.487 + 102.739 = $475 Mil.
Total Current Assets was $756 Mil.
Total Assets was $1,292 Mil.
Property, Plant and Equipment(Net PPE) was $298 Mil.
Depreciation, Depletion and Amortization(DDA) was $44 Mil.
Selling, General & Admin. Expense(SGA) was $310 Mil.
Total Current Liabilities was $272 Mil.
Long-Term Debt was $109 Mil.
Net Income was 20.75 + 27.819 + 33.398 + 19.212 = $101 Mil.
Non Operating Income was 0.026 + 0.05 + 0.11 + 0.081 = $0 Mil.
Cash Flow from Operations was 36.143 + 96.336 + 69.998 + -29.957 = $173 Mil.
Accounts Receivable was $223 Mil.
Revenue was 653.601 + 762.275 + 838.171 + 633.025 = $2,887 Mil.
Gross Profit was 97.173 + 110.706 + 112.443 + 79.582 = $400 Mil.
Total Current Assets was $648 Mil.
Total Assets was $1,108 Mil.
Property, Plant and Equipment(Net PPE) was $251 Mil.
Depreciation, Depletion and Amortization(DDA) was $41 Mil.
Selling, General & Admin. Expense(SGA) was $264 Mil.
Total Current Liabilities was $204 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)
=(282.253 / 3240.493) / (222.964 / 2887.072)
=0.08710187 / 0.07722842
=1.1278

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)
=(399.904 / 2887.072) / (474.59 / 3240.493)
=0.13851542 / 0.14645611
=0.9458

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 - (756.438 + 297.851) / 1292.058) / (1 - (648.232 + 251.15) / 1107.679)
=0.18402347 / 0.18804816
=0.9786

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
=3240.493 / 2887.072
=1.1224

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))
=(41.241 / (41.241 + 251.15)) / (43.618 / (43.618 + 297.851))
=0.14104743 / 0.12773634
=1.1042

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)
=(310.15 / 3240.493) / (264.265 / 2887.072)
=0.09571075 / 0.09153391
=1.0456

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)
=((109.059 + 271.777) / 1292.058) / ((84.75 + 204.175) / 1107.679)
=0.29475147 / 0.2608382
=1.13

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
=(101.179 - 0.267 - 172.52) / 1292.058
=-0.0554

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 -2.59 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

Sep14Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16Dec16
DSRI 1.00071.00820.97040.94310.95691.04871.02750.99421.1811.1278
GMI 0.87160.93070.9470.96760.94020.88290.85870.84880.88840.9458
AQI 0.92150.99030.95550.9921.03570.95061.0490.97960.95140.9786
SGI 1.06231.07691.10911.121.11211.08521.07191.0591.06341.1224
DEPI 0.96710.97050.95520.91790.90690.90490.92550.96321.09441.1042
SGAI 1.05321.04391.01971.02121.02891.05981.07371.08091.06651.0456
LVGI 1.02491.0971.1421.06750.98360.97420.75970.86621.19311.13
TATA -0.021-0.0156-0.0053-0.0201-0.048-0.08-0.0874-0.0631-0.0647-0.0554
M-score -2.64-2.56-2.54-2.57-2.67-2.83-2.80-2.79-2.70-2.59
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