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GuruFocus has detected 1 Warning Sign with D.R. Horton Inc $DHI.
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D.R. Horton Inc (NYSE:DHI)
Beneish M-Score
-2.09 (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.

D.R. Horton Inc has a M-score of -2.09 signals that the company is a manipulator.

DHI' s Beneish M-Score Range Over the Past 10 Years
Min: -8.92   Max: 0.09
Current: -2.09

-8.92
0.09

During the past 13 years, the highest Beneish M-Score of D.R. Horton Inc was 0.09. The lowest was -8.92. And the median was -1.73.


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 D.R. Horton 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+0.528 * 0.9779+0.404 * 0.91+0.892 * 1.1611+0.115 * 1.3917
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9857+4.679 * 0.0436-0.327 * 0.88
=-2.09

* 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 $0 Mil.
Revenue was 3251.3 + 2904.2 + 3741.2 + 3231.9 = $13,129 Mil.
Gross Profit was 701.4 + 636.3 + 822.9 + 708.9 = $2,870 Mil.
Total Current Assets was $10,042 Mil.
Total Assets was $11,921 Mil.
Property, Plant and Equipment(Net PPE) was $248 Mil.
Depreciation, Depletion and Amortization(DDA) was $61 Mil.
Selling, General & Admin. Expense(SGA) was $1,403 Mil.
Total Current Liabilities was $1,428 Mil.
Long-Term Debt was $3,222 Mil.
Net Income was 229.2 + 206.9 + 283.7 + 249.8 = $970 Mil.
Non Operating Income was 2.4 + 4.1 + -11.3 + 3.8 = $-1 Mil.
Cash Flow from Operations was -107.5 + -33.3 + 529.4 + 61.7 = $450 Mil.
Accounts Receivable was $0 Mil.
Revenue was 2767.9 + 2416.4 + 3172.4 + 2950.8 = $11,308 Mil.
Gross Profit was 598.6 + 524.2 + 663.6 + 630.4 = $2,417 Mil.
Total Current Assets was $9,452 Mil.
Total Assets was $11,300 Mil.
Property, Plant and Equipment(Net PPE) was $150 Mil.
Depreciation, Depletion and Amortization(DDA) was $56 Mil.
Selling, General & Admin. Expense(SGA) was $1,226 Mil.
Total Current Liabilities was $1,347 Mil.
Long-Term Debt was $3,663 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)
=(0 / 13128.6) / (0 / 11307.5)
=0 / 0
=1

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)
=(2416.8 / 11307.5) / (2869.5 / 13128.6)
=0.21373425 / 0.21856862
=0.9779

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 - (10042.4 + 248.1) / 11921.1) / (1 - (9452.1 + 149.5) / 11300.2)
=0.13678268 / 0.15031592
=0.91

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
=13128.6 / 11307.5
=1.1611

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))
=(56.3 / (56.3 + 149.5)) / (60.7 / (60.7 + 248.1))
=0.27356657 / 0.19656736
=1.3917

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)
=(1402.7 / 13128.6) / (1225.6 / 11307.5)
=0.10684308 / 0.10838824
=0.9857

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)
=((3222.4 + 1428) / 11921.1) / ((3662.7 + 1346.8) / 11300.2)
=0.39009823 / 0.44331074
=0.88

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
=(969.6 - -1 - 450.3) / 11921.1
=0.0436

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.

D.R. Horton Inc has a M-score of -2.09 signals that the company is likely to 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.

D.R. Horton Inc Annual Data

Sep07Sep08Sep09Sep10Sep11Sep12Sep13Sep14Sep15Sep16
DSRI 1110.04540.93770.970111
GMI 3.0916-0.2857-7.73320.18511.04080.85260.88091.02631.03530.9682
AQI 0.93651.28650.52961.17231.11860.86791.37180.9441.01550.9146
SGI 0.75050.58830.55041.2030.82651.19721.43761.28211.34881.1232
DEPI 0.86630.82571.45131.31980.90821.24841.19791.02490.62251.1313
SGAI 1.04041.17041.22460.83681.14860.89330.86790.98250.91070.9911
LVGI 0.91591.23071.05710.84050.91410.98761.07410.91050.94810.8747
TATA -0.179-0.5897-0.2638-0.08030.00790.16990.18940.11680.00470.0231
M-score -2.46-6.29-8.92-3.80-2.59-1.62-2.01-1.66-2.13-2.26

D.R. Horton Inc Quarterly Data

Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16Dec16Mar17
DSRI 1111111111
GMI 1.07741.12151.04761.03531.00440.97310.9850.96820.97120.9779
AQI 1.69811.02411.53911.01550.98790.99060.96870.91460.91260.91
SGI 1.30081.33941.36581.34881.26341.21331.14471.12321.15611.1611
DEPI 0.91870.90770.89610.62250.55590.59470.80551.13131.23741.3917
SGAI 0.97190.96220.92320.91070.92340.92410.96350.99110.97830.9857
LVGI 0.93470.92170.99570.94810.92670.89740.87550.87470.74330.88
TATA 0.12840.1050.05220.0047-0.005-0.00710.02150.02310.02950.0436
M-score -1.27-1.59-1.66-2.13-2.28-2.34-2.25-2.26-2.14-2.09
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