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GuruFocus has detected 3 Warning Signs with DaVita Inc $DVA.
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DaVita Inc (NYSE:DVA)
Beneish M-Score
-2.73 (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.

DaVita Inc has a M-score of -2.73 suggests that the company is not a manipulator.

DVA' s Beneish M-Score Range Over the Past 10 Years
Min: -3.51   Max: 0.04
Current: -2.73

-3.51
0.04

During the past 13 years, the highest Beneish M-Score of DaVita Inc was 0.04. The lowest was -3.51. And the median was -2.57.


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 DaVita 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 * 0.9702+0.528 * 1.0446+0.404 * 0.9725+0.892 * 1.0559+0.115 * 0.9679
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0112+4.679 * -0.0608-0.327 * 0.9807
=-2.73

* 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 $1,901 Mil.
Revenue was 3697.283 + 3715.742 + 3730.576 + 3717.651 = $14,861 Mil.
Gross Profit was 974.463 + 1019.993 + 1032.947 + 1046.626 = $4,074 Mil.
Total Current Assets was $4,604 Mil.
Total Assets was $19,388 Mil.
Property, Plant and Equipment(Net PPE) was $3,171 Mil.
Depreciation, Depletion and Amortization(DDA) was $741 Mil.
Selling, General & Admin. Expense(SGA) was $1,598 Mil.
Total Current Liabilities was $2,814 Mil.
Long-Term Debt was $8,919 Mil.
Net Income was 447.697 + 157.726 + 571.332 + 53.382 = $1,230 Mil.
Non Operating Income was 4.243 + 0.667 + 1.876 + 3.215 = $10 Mil.
Cash Flow from Operations was 865.174 + 482.182 + 535.623 + 516.637 = $2,400 Mil.
Accounts Receivable was $1,855 Mil.
Revenue was 3581.136 + 3533.589 + 3525.665 + 3434.618 = $14,075 Mil.
Gross Profit was 998.803 + 1018.458 + 1024.65 + 988.542 = $4,030 Mil.
Total Current Assets was $4,200 Mil.
Total Assets was $18,514 Mil.
Property, Plant and Equipment(Net PPE) was $2,911 Mil.
Depreciation, Depletion and Amortization(DDA) was $654 Mil.
Selling, General & Admin. Expense(SGA) was $1,497 Mil.
Total Current Liabilities was $2,444 Mil.
Long-Term Debt was $8,980 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)
=(1900.561 / 14861.252) / (1855.285 / 14075.008)
=0.127887 / 0.13181413
=0.9702

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)
=(4030.453 / 14075.008) / (4074.029 / 14861.252)
=0.28635529 / 0.27413767
=1.0446

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 - (4603.9 + 3171.199) / 19388.264) / (1 - (4199.56 + 2911.205) / 18514.198)
=0.5989791 / 0.61592908
=0.9725

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
=14861.252 / 14075.008
=1.0559

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))
=(653.59 / (653.59 + 2911.205)) / (741.103 / (741.103 + 3171.199))
=0.18334575 / 0.18942888
=0.9679

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)
=(1598.049 / 14861.252) / (1496.763 / 14075.008)
=0.10753125 / 0.10634189
=1.0112

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)
=((8918.878 + 2813.577) / 19388.264) / ((8979.855 + 2443.618) / 18514.198)
=0.6051318 / 0.6170115
=0.9807

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
=(1230.137 - 10.001 - 2399.616) / 19388.264
=-0.0608

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.

DaVita Inc has a M-score of -2.73 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.

DaVita Inc Annual Data

Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15Dec16
DSRI 0.92271.07790.95280.93161.05270.980.72560.94461.04911.0393
GMI 0.96031.03451.00941.0570.92430.98031.0491.05511.00061.033
AQI 0.95770.97230.97360.96961.09211.20850.95170.97690.92761.0199
SGI 1.07861.07521.07931.01811.08241.21611.4371.08761.07711.0699
DEPI 0.99160.9960.99891.02921.06071.01340.79851.00631.03721.007
SGAI 1.00420.75280.9691.05661.10631.06870.920.98591.06871.0251
LVGI 0.9210.96320.91551.04920.98631.03010.96020.95081.04431.009
TATA 0.012-0.0346-0.0328-0.0447-0.0792-0.0348-0.0669-0.0364-0.0674-0.0583
M-score -2.44-2.44-2.58-2.74-2.74-2.41-2.65-2.58-2.73-2.64

DaVita Inc Quarterly Data

Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16Dec16Mar17
DSRI 0.94460.99930.99251.06831.04911.02611.04231.01481.03930.9702
GMI 1.05511.03691.03441.01391.00061.00111.00341.02121.0331.0446
AQI 0.97690.95540.95660.95560.92760.97810.98061.00571.01990.9725
SGI 1.08761.08881.08341.08351.07711.07931.07941.07271.06991.0559
DEPI 1.00631.01391.01581.01531.03721.05851.04511.04051.0070.9679
SGAI 0.98591.03021.04681.05481.06871.05121.03961.05871.02511.0112
LVGI 0.95080.98480.98371.00291.04431.02471.02851.00871.0090.9807
TATA -0.0304-0.0445-0.038-0.0277-0.0674-0.0574-0.0917-0.0642-0.0583-0.0608
M-score -2.56-2.61-2.59-2.49-2.73-2.67-2.82-2.70-2.64-2.73
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