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GuruFocus has detected 2 Warning Signs with Denbury Resources Inc $DNR.
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Denbury Resources Inc (NYSE:DNR)
Beneish M-Score
-2.61 (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.

Denbury Resources Inc has a M-score of -2.61 suggests that the company is not a manipulator.

DNR' s Beneish M-Score Range Over the Past 10 Years
Min: -9.49   Max: 1.14
Current: -2.61

-9.49
1.14

During the past 13 years, the highest Beneish M-Score of Denbury Resources Inc was 1.14. The lowest was -9.49. And the median was -2.71.


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 Denbury Resources 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 * 1.5346+0.528 * 0.9855+0.404 * 0.8006+0.892 * 0.9226+0.115 * 0.4872
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.8549+4.679 * -0.0776-0.327 * 1.2006
=-2.61

* 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 $136 Mil.
Revenue was 275.454 + 271.619 + 253.985 + 255.148 = $1,056 Mil.
Gross Profit was 146.956 + 148.026 + 132.15 + 141.059 = $568 Mil.
Total Current Assets was $188 Mil.
Total Assets was $4,309 Mil.
Property, Plant and Equipment(Net PPE) was $4,018 Mil.
Depreciation, Depletion and Amortization(DDA) was $820 Mil.
Selling, General & Admin. Expense(SGA) was $104 Mil.
Total Current Liabilities was $356 Mil.
Long-Term Debt was $2,956 Mil.
Net Income was 21.53 + -385.726 + -24.59 + -380.668 = $-769 Mil.
Non Operating Income was 20.714 + -53.472 + -41.74 + -601.877 = $-676 Mil.
Cash Flow from Operations was 24.262 + 59.864 + 96.415 + 60.915 = $241 Mil.
Accounts Receivable was $96 Mil.
Revenue was 194.844 + 269.617 + 303.6 + 376.694 = $1,145 Mil.
Gross Profit was 78.596 + 124.694 + 174.223 + 229.364 = $607 Mil.
Total Current Assets was $273 Mil.
Total Assets was $5,539 Mil.
Property, Plant and Equipment(Net PPE) was $5,102 Mil.
Depreciation, Depletion and Amortization(DDA) was $459 Mil.
Selling, General & Admin. Expense(SGA) was $132 Mil.
Total Current Liabilities was $324 Mil.
Long-Term Debt was $3,222 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)
=(135.829 / 1056.206) / (95.934 / 1144.755)
=0.12860086 / 0.08380308
=1.5346

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)
=(606.877 / 1144.755) / (568.191 / 1056.206)
=0.53013702 / 0.53795472
=0.9855

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 - (188.269 + 4018.388) / 4308.659) / (1 - (272.975 + 5101.797) / 5538.547)
=0.02367372 / 0.02957003
=0.8006

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
=1056.206 / 1144.755
=0.9226

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))
=(459.068 / (459.068 + 5101.797)) / (819.872 / (819.872 + 4018.388))
=0.08255334 / 0.16945596
=0.4872

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)
=(104.266 / 1056.206) / (132.185 / 1144.755)
=0.09871749 / 0.11547012
=0.8549

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)
=((2956.385 + 356.279) / 4308.659) / ((3222.497 + 324.402) / 5538.547)
=0.76883875 / 0.64040244
=1.2006

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
=(-769.454 - -676.375 - 241.456) / 4308.659
=-0.0776

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.

Denbury Resources Inc has a M-score of -2.61 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.

Denbury Resources Inc Annual Data

Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15Dec16
DSRI 5.09790.63921.95310.82881.13130.51831.21750.74361.19821.3299
GMI 1.07060.97651.23620.86740.86681.16731.05690.88061.32381.0589
AQI 1.3860.96481.51932.2140.90550.93320.9470.95050.23050.8687
SGI 1.32971.40460.65062.16141.20171.06371.02470.96750.51640.7758
DEPI 0.98121.11.13770.99851.24620.82191.20130.90840.6020.5143
SGAI 1.22951.51521.22520.30261.86140.75511.13581.05591.98720.872
LVGI 1.02121.0121.15010.83250.98981.02130.99950.98271.87371.2723
TATA -0.1252-0.1109-0.125-0.061-0.0612-0.0746-0.0698-0.07840.1405-0.073
M-score 1.14-3.08-2.24-1.29-2.69-3.14-2.58-3.21-2.71-2.86

Denbury Resources Inc Quarterly Data

Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16Dec16Mar17
DSRI 0.74360.50490.84390.79581.19821.18871.02591.21271.32991.5346
GMI 0.88060.84680.93550.95131.32381.34611.3591.39141.05890.9855
AQI 0.95050.95621.12040.22450.23050.24270.23111.21130.86870.8006
SGI 0.96750.81570.69510.5770.51640.54480.56670.66160.77580.9226
DEPI 0.90840.92090.79280.67810.6020.67610.87751.22480.51430.4872
SGAI 1.05591.49151.6771.88131.98721.35641.15870.96260.8720.8549
LVGI 0.98270.91341.01571.48961.87372.00731.87481.35891.27231.2006
TATA -0.0784-0.0886-0.06590.00620.14050.18150.16940.0724-0.073-0.0776
M-score -3.21-3.68-3.33-3.70-2.71-2.41-2.50-2.04-2.86-2.61
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