New Home Company Inc. (The)
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New Home Company Inc. (The) (NWHM) Beneish M-score
New Home Company Inc. (The)'s Beneish M-score for fiscal 2020 is −4.48; values above −1.78 are the model's flag for possible earnings manipulation — a statistical screen, not a finding.
Beneish M-score, annual
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Annual newest first
| Period | Beneish M-score | Change (points) |
|---|---|---|
| FY2020 | −4.48 | (0.95) |
| FY2019 | −3.53 | (1.80) |
| FY2018 | −1.73 | 0.27 |
| FY2017 | −2.00 | (0.55) |
| FY2016 | −1.45 | (0.92) |
| FY2015 | −0.53 | — |
How fiscal 2020’s score is made up
| Component | This year | Year before | Result | Points |
|---|---|---|---|---|
| Days’ sales in receivables index | 0.41 | — | 0.38 | |
| Gross margin index | 0.97 | — | 0.51 | |
| Asset quality index Asset quality not computable — index set to 1 | 1.00 | — | Set to 1 | 0.40 |
| Sales growth index | 0.76 | — | 0.68 | |
| Depreciation index Depreciation not reported — index set to 1 | 1.00 | — | Set to 1 | 0.12 |
| SG&A index | 1.22 | — | −0.21 | |
| Total accruals to total assets | (0.25) | — | −1.19 | |
| Leverage index | 0.98 | — | −0.32 | |
| Beneish M-score | Low — no pattern the model associates with manipulation | −4.48 | ||
How the Beneish M-score works
M = −4.84 + 0.920 × DSRI + 0.528 × GMI + 0.404 × AQI + 0.892 × SGI + 0.115 × DEPI − 0.172 × SGAI + 4.679 × TATA − 0.327 × LVGI (Beneish, 1999): eight changes in the accounts from one fiscal year to the next, which the model weighs for the pattern seen in companies that later restated their earnings. Higher is worse.
| below −2.22 | Low — no pattern the model associates with manipulation |
|---|---|
| −2.22 to −1.78 | Elevated |
| above −1.78 | Flagged by the model |
−1.78 is the cut-off usually quoted from the paper, −2.22 a common conservative one. A statistical screen, not a finding of wrongdoing.
When asset quality, depreciation or SG&A cannot be worked out, that index is set to 1, as Beneish did, and the breakdown says so; with all three missing there is no score. Depreciation includes amortisation, and asset quality leaves out securities. Not worked out for banks, insurers and REITs.
What Beneish M-score is
The Beneish M-Score combines eight year-on-year changes in the accounts into a statistical screen for patterns seen in companies that overstated earnings.
−4.84 + 0.920 × DSRI + 0.528 × GMI + 0.404 × AQI + 0.892 × SGI + 0.115 × DEPI − 0.172 × SGAI + 4.679 × TATA − 0.327 × LVGI