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GuruFocus has detected 4 Warning Signs with Dollar Tree Inc $DLTR.
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Dollar Tree Inc (NAS:DLTR)
Beneish M-Score
-2.68 (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.

Dollar Tree Inc has a M-score of -2.68 suggests that the company is not a manipulator.

DLTR' s Beneish M-Score Range Over the Past 10 Years
Min: -6.34   Max: 6.59
Current: -2.68

-6.34
6.59

During the past 13 years, the highest Beneish M-Score of Dollar Tree Inc was 6.59. The lowest was -6.34. And the median was -2.73.


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 Dollar Tree 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 * 0.9599+0.404 * 0.9912+0.892 * 1.1365+0.115 * 0.9422
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.987+4.679 * -0.069-0.327 * 0.908
=-2.68

* 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 $0 Mil.
Revenue was 5287.1 + 5635.5 + 5001.6 + 4996.3 = $20,921 Mil.
Gross Profit was 1627.1 + 1807.3 + 1520.5 + 1512.4 = $6,467 Mil.
Total Current Assets was $4,278 Mil.
Total Assets was $15,995 Mil.
Property, Plant and Equipment(Net PPE) was $3,094 Mil.
Depreciation, Depletion and Amortization(DDA) was $629 Mil.
Selling, General & Admin. Expense(SGA) was $4,742 Mil.
Total Current Liabilities was $2,241 Mil.
Long-Term Debt was $6,132 Mil.
Net Income was 200.5 + 321.8 + 171.6 + 170.2 = $864 Mil.
Non Operating Income was -0.3 + 573.4 + -224.3 + -174.6 = $174 Mil.
Cash Flow from Operations was 430.7 + 1018 + -25 + 369.3 = $1,793 Mil.
Accounts Receivable was $0 Mil.
Revenue was 5085.8 + 5365.3 + 4945.2 + 3011.2 = $18,408 Mil.
Gross Profit was 1554.6 + 1652.6 + 1400 + 855.2 = $5,462 Mil.
Total Current Assets was $4,172 Mil.
Total Assets was $16,061 Mil.
Property, Plant and Equipment(Net PPE) was $3,153 Mil.
Depreciation, Depletion and Amortization(DDA) was $597 Mil.
Selling, General & Admin. Expense(SGA) was $4,227 Mil.
Total Current Liabilities was $2,049 Mil.
Long-Term Debt was $7,210 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 / 20920.5) / (0 / 18407.5)
=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)
=(5462.4 / 18407.5) / (6467.3 / 20920.5)
=0.29674861 / 0.30913697
=0.9599

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 - (4278.1 + 3093.9) / 15994.7) / (1 - (4172.1 + 3153.2) / 16060.9)
=0.53909733 / 0.54390476
=0.9912

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
=20920.5 / 18407.5
=1.1365

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))
=(597.1 / (597.1 + 3153.2)) / (629.1 / (629.1 + 3093.9))
=0.15921393 / 0.16897663
=0.9422

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)
=(4741.5 / 20920.5) / (4226.8 / 18407.5)
=0.22664372 / 0.22962379
=0.987

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)
=((6131.7 + 2240.6) / 15994.7) / ((7209.8 + 2049.1) / 16060.9)
=0.52344214 / 0.576487
=0.908

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
=(864.1 - 174.2 - 1793) / 15994.7
=-0.069

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.

Dollar Tree Inc has a M-score of -2.68 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.

Dollar Tree Inc Annual Data

Jan08Jan09Jan10Jan11Jan12Jan13Jan14Jan15Jan16Jan17
DSRI 111111117.80590.6668
GMI 0.99281.00470.96571.00020.98940.99991.00821.00881.17390.9735
AQI 1.35070.86750.95111.09130.98150.9150.93530.76236.75130.9907
SGI 1.06881.09481.12621.12451.12721.11521.06031.09721.80171.3369
DEPI 1.03080.95141.02481.02061.071.07371.04051.02021.07720.7945
SGAI 1.01110.99060.97310.96450.97150.97330.99040.99881.00410.9726
LVGI 1.07530.88350.9781.03731.08520.95021.53550.84921.32760.8979
TATA -0.0929-0.0853-0.1157-0.0533-0.0852-0.0418-0.071-0.0967-0.048-0.0606
M-score -2.74-2.81-2.93-2.59-2.79-2.58-2.95-2.896.59-2.77

Dollar Tree Inc Quarterly Data

Jan15Apr15Jul15Oct15Jan16Apr16Jul16Oct16Jan17Apr17
DSRI 11117.80591110.66681
GMI 1.00881.00951.06021.13081.17391.18481.10891.01940.97350.9599
AQI 0.76230.27745.1154.76186.751319.21910.99361.00180.99070.9912
SGI 1.09721.10081.19721.50791.80172.09692.08971.62181.33691.1365
DEPI 1.02021.03082.06011.38231.07720.9110.40840.61030.79450.9422
SGAI 0.99881.00721.01311.01331.00410.98560.97260.96950.97260.987
LVGI 0.84921.62521.27531.2931.32760.70920.9160.89870.89790.908
TATA -0.0967-0.03320.01750.0278-0.048-0.0472-0.085-0.0773-0.0606-0.069
M-score -2.89-3.03-0.50-0.366.595.82-1.89-2.28-2.77-2.68
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