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GuruFocus has detected 2 Warning Signs with Dillard's Inc $DDS.
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Dillard's Inc (NYSE:DDS)
Beneish M-Score
-3.06 (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.

Dillard's Inc has a M-score of -3.06 suggests that the company is not a manipulator.

DDS' s Beneish M-Score Range Over the Past 10 Years
Min: -3.78   Max: 4.2
Current: -3.06

-3.78
4.2

During the past 13 years, the highest Beneish M-Score of Dillard's Inc was 4.20. The lowest was -3.78. And the median was -2.74.


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 Dillard's 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 * 0.9778+0.528 * 0.9975+0.404 * 0.9938+0.892 * 0.9479+0.115 * 0.9631
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0489+4.679 * -0.0988-0.327 * 1.118
=-3.06

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

This Year (Apr17) TTM:Last Year (Apr16) TTM:
Accounts Receivable was $39 Mil.
Revenue was 1452.874 + 1983.967 + 1406.495 + 1488.75 = $6,332 Mil.
Gross Profit was 582.789 + 628.359 + 527.63 + 495.391 = $2,234 Mil.
Total Current Assets was $2,093 Mil.
Total Assets was $4,115 Mil.
Property, Plant and Equipment(Net PPE) was $1,765 Mil.
Depreciation, Depletion and Amortization(DDA) was $245 Mil.
Selling, General & Admin. Expense(SGA) was $1,682 Mil.
Total Current Liabilities was $1,236 Mil.
Long-Term Debt was $730 Mil.
Net Income was 66.302 + 56.908 + 22.798 + 12.083 = $158 Mil.
Non Operating Income was 0.019 + -10.391 + -0.023 + 0.781 = $-10 Mil.
Cash Flow from Operations was 77.441 + 391.102 + 39.161 + 66.568 = $574 Mil.
Accounts Receivable was $43 Mil.
Revenue was 1538.797 + 2117.429 + 1472.854 + 1550.844 = $6,680 Mil.
Gross Profit was 600.218 + 660.294 + 559.934 + 530.513 = $2,351 Mil.
Total Current Assets was $1,883 Mil.
Total Assets was $4,026 Mil.
Property, Plant and Equipment(Net PPE) was $1,889 Mil.
Depreciation, Depletion and Amortization(DDA) was $252 Mil.
Selling, General & Admin. Expense(SGA) was $1,692 Mil.
Total Current Liabilities was $900 Mil.
Long-Term Debt was $820 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)
=(39.424 / 6332.086) / (42.532 / 6679.924)
=0.00622607 / 0.00636714
=0.9778

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)
=(2350.959 / 6679.924) / (2234.169 / 6332.086)
=0.35194397 / 0.35283302
=0.9975

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 - (2092.742 + 1764.519) / 4114.905) / (1 - (1882.694 + 1889.318) / 4025.646)
=0.06261238 / 0.06300455
=0.9938

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
=6332.086 / 6679.924
=0.9479

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))
=(251.678 / (251.678 + 1889.318)) / (245.32 / (245.32 + 1764.519))
=0.11755183 / 0.12205953
=0.9631

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)
=(1681.932 / 6332.086) / (1691.665 / 6679.924)
=0.26562052 / 0.25324614
=1.0489

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)
=((729.888 + 1235.696) / 4114.905) / ((820.147 + 899.886) / 4025.646)
=0.47767421 / 0.42726882
=1.118

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
=(158.091 - -9.614 - 574.272) / 4114.905
=-0.0988

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.

Dillard's Inc has a M-score of -3.06 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.

Dillard's Inc Annual Data

Jan08Jan09Jan10Jan11Jan12Jan13Jan14Jan15Jan16Jan17
DSRI 1.09718.53060.80630.40841.08111.04140.98721.80850.83731.0768
GMI 1.01441.1340.62031.36960.98830.99271.00580.99731.03921.0144
AQI 1.01210.47740.91071.06373.62941.04650.950.95651.09091.0123
SGI 0.94380.94810.8911.00511.02331.05420.99111.01320.99620.9502
DEPI 1.02010.98141.010.94360.95860.93640.95420.97260.96150.9524
SGAI 1.0470.98980.95770.980.97850.9640.98091.0061.00721.0431
LVGI 1.01511.08220.94531.05360.98920.99771.00610.98441.04611.0792
TATA -0.037-0.1435-0.1215-0.077-0.0196-0.0515-0.0444-0.0675-0.049-0.087
M-score -2.613.56-3.53-3.18-1.42-2.62-2.73-2.06-2.83-2.89

Dillard's Inc Quarterly Data

Jan15Apr15Jul15Oct15Jan16Apr16Jul16Oct16Jan17Apr17
DSRI 1.80852.94912.46611.10810.83730.75320.87350.93791.07680.9778
GMI 0.99730.99871.00591.01131.03921.04851.04611.04811.01440.9975
AQI 0.95650.95631.00560.99731.09091.10981.05291.11241.01230.9938
SGI 1.01321.0171.02331.02060.99620.98160.96710.96110.95020.9479
DEPI 0.97260.97140.96950.94930.96150.94640.92950.95340.95240.9631
SGAI 1.0061.00581.00020.99861.00721.01331.02091.02561.04311.0489
LVGI 0.98440.96751.01081.05241.04611.04621.05790.95341.07921.118
TATA -0.0675-0.0476-0.0538-0.0398-0.049-0.0373-0.0689-0.0708-0.087-0.0988
M-score -2.06-0.91-1.36-2.57-2.83-2.85-2.93-2.83-2.89-3.06
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