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GuruFocus has detected 3 Warning Signs with M.D.C. Holdings Inc $MDC.
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M.D.C. Holdings Inc (NYSE:MDC)
Beneish M-Score
-2.71 (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.

M.D.C. Holdings Inc has a M-score of -2.71 suggests that the company is not a manipulator.

MDC' s Beneish M-Score Range Over the Past 10 Years
Min: -5.38   Max: 3.19
Current: -2.71

-5.38
3.19

During the past 13 years, the highest Beneish M-Score of M.D.C. Holdings Inc was 3.19. The lowest was -5.38. And the median was -1.97.


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 M.D.C. Holdings 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 * 0.7334+0.528 * 1.0049+0.404 * 1.0233+0.892 * 1.296+0.115 * 0.7521
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.8664+4.679 * -0.0582-0.327 * 0.9468
=-2.71

* 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 $36 Mil.
Revenue was 581.705 + 672.338 + 595.42 + 571.511 = $2,421 Mil.
Gross Profit was 99.804 + 92.517 + 98.936 + 93.859 = $385 Mil.
Total Current Assets was $2,169 Mil.
Total Assets was $2,507 Mil.
Property, Plant and Equipment(Net PPE) was $28 Mil.
Depreciation, Depletion and Amortization(DDA) was $5 Mil.
Selling, General & Admin. Expense(SGA) was $261 Mil.
Total Current Liabilities was $209 Mil.
Long-Term Debt was $912 Mil.
Net Income was 22.249 + 40.376 + 26.359 + 26.913 = $116 Mil.
Non Operating Income was -0.452 + 31.689 + -1.884 + 7.714 = $37 Mil.
Cash Flow from Operations was 93.886 + 124.82 + 13.183 + -7.101 = $225 Mil.
Accounts Receivable was $38 Mil.
Revenue was 407.761 + 530.101 + 468.487 + 461.708 = $1,868 Mil.
Gross Profit was 69.831 + 70.185 + 81.905 + 76.689 = $299 Mil.
Total Current Assets was $2,068 Mil.
Total Assets was $2,386 Mil.
Property, Plant and Equipment(Net PPE) was $29 Mil.
Depreciation, Depletion and Amortization(DDA) was $4 Mil.
Selling, General & Admin. Expense(SGA) was $232 Mil.
Total Current Liabilities was $226 Mil.
Long-Term Debt was $901 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)
=(36.21 / 2420.974) / (38.096 / 1868.057)
=0.01495679 / 0.02039338
=0.7334

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)
=(298.61 / 1868.057) / (385.116 / 2420.974)
=0.15985058 / 0.15907482
=1.0049

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 - (2168.908 + 27.984) / 2506.548) / (1 - (2068.416 + 29.374) / 2385.806)
=0.12353883 / 0.12072063
=1.0233

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
=2420.974 / 1868.057
=1.296

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))
=(4.059 / (4.059 + 29.374)) / (5.387 / (5.387 + 27.984))
=0.12140699 / 0.16142759
=0.7521

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)
=(260.561 / 2420.974) / (232.062 / 1868.057)
=0.10762652 / 0.1242264
=0.8664

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)
=((912.479 + 209.058) / 2506.548) / ((901.019 + 226.493) / 2385.806)
=0.44744286 / 0.47259165
=0.9468

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
=(115.897 - 37.067 - 224.788) / 2506.548
=-0.0582

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.

M.D.C. Holdings Inc has a M-score of -2.71 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.

M.D.C. Holdings Inc Annual Data

Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15Dec16
DSRI 1.66430.23510.95430.82212.87190.93650.591.19120.7291.491
GMI 1.54871.02650.72511.23891.28720.88620.85541.01951.08010.9864
AQI 1.12280.56890.94111.08331.93281.2251.51721.06280.96241.0427
SGI 0.6010.50530.61611.03180.88151.39271.40861.02411.11991.2224
DEPI 1.10652.66581.57090.99710.82751.18771.1430.96430.90580.8144
SGAI 1.23751.1871.19440.92220.92490.67070.90510.93050.99430.9056
LVGI 1.14091.10420.99111.09970.86771.02730.97320.89691.00490.9957
TATA -0.1827-0.3475-0.07330.05380.01540.07080.2110.0970.0144-0.0191
M-score -2.81-5.29-3.34-2.22-0.23-1.76-1.33-1.75-2.54-1.91

M.D.C. Holdings Inc Quarterly Data

Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16Dec16Mar17
DSRI 1.19121.06680.94341.03590.7291.00841.53261.26721.4910.7334
GMI 1.01951.07541.0981.0621.08011.0120.99151.00560.98641.0049
AQI 1.06281.07231.14451.08670.96240.90430.99031.05561.04271.0233
SGI 1.02411.071.05491.10571.11991.09831.15011.18931.22241.296
DEPI 0.96430.89250.86720.89810.90580.99180.94930.89420.81440.7521
SGAI 0.93050.89970.94390.96330.99431.02840.99880.95240.90560.8664
LVGI 0.89690.89510.95810.91681.00491.00441.01431.0130.99570.9468
TATA 0.0970.03730.02830.02430.01440.03010.0460.0162-0.0191-0.0582
M-score -1.75-2.07-2.23-2.15-2.54-2.28-1.66-1.97-1.91-2.71
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