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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.
During the past 13 years, the highest Beneish M-Score of Group 1 Automotive Inc was 1.33. The lowest was -4.06. And the median was -2.38.
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 Group 1 Automotive 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 * 1.4478||+||0.528 * 0.9902||+||0.404 * 1.0292||+||0.892 * 1.097||+||0.115 * 0.9682|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9797||+||4.679 * 0.0281||-||0.327 * 1.0742|
|This Year (Mar15) TTM:||Last Year (Mar14) TTM:|
|Accounts Receivable was $112 Mil.|
Revenue was 2432.854 + 2538.94 + 2626.448 + 2511.638 = $10,110 Mil.
Gross Profit was 363.884 + 365.959 + 374.709 + 369.148 = $1,474 Mil.
Total Current Assets was $1,982 Mil.
Total Assets was $4,098 Mil.
Property, Plant and Equipment(Net PPE) was $944 Mil.
Depreciation, Depletion and Amortization(DDA) was $44 Mil.
Selling, General & Admin. Expense(SGA) was $1,076 Mil.
Total Current Liabilities was $1,817 Mil.
Long-Term Debt was $1,078 Mil.
Net Income was 35.815 + 18.677 + 26.162 + 16.862 = $98 Mil.
Non Operating Income was -94.556 + 0 + -22.79 + -23.614 = $-141 Mil.
Cash Flow from Operations was 58.167 + -73.548 + 140.903 + -2.259 = $123 Mil.
|Accounts Receivable was $71 Mil.
Revenue was 2260.863 + 2279.492 + 2340.147 + 2335.11 = $9,216 Mil.
Gross Profit was 338.122 + 321.321 + 329.462 + 341.274 = $1,330 Mil.
Total Current Assets was $1,936 Mil.
Total Assets was $3,826 Mil.
Property, Plant and Equipment(Net PPE) was $827 Mil.
Depreciation, Depletion and Amortization(DDA) was $37 Mil.
Selling, General & Admin. Expense(SGA) was $1,001 Mil.
Total Current Liabilities was $1,851 Mil.
Long-Term Debt was $665 Mil.
1. DSRI = Days Sales in Receivables Index
A large increase in DSR could be indicative of revenue inflation.
|DSRI||=||(Receivables_t / Revenue_t)||/||(Receivables_t-1 / Revenue_t-1)|
|=||(112.105 / 10109.88)||/||(70.581 / 9215.612)|
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.
|=||(GrossProfit_t-1 / Revenue_t-1)||/||(GrossProfit_t / Revenue_t)|
|=||(365.959 / 9215.612)||/||(363.884 / 10109.88)|
3. AQI = Asset Quality Index
AQI is the ratio of asset quality in year t to year t-1.
|AQI||=||(1 - (CurrentAssets_t + PPE_t) / TotalAssets_t)||/||(1 - (CurrentAssets_t-1 + PPE_t-1) / TotalAssets_t-1)|
|=||(1 - (1982.489 + 944.485) / 4098.467)||/||(1 - (1936.273 + 827.121) / 3825.937)|
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.
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))|
|=||(37.338 / (37.338 + 827.121))||/||(44.103 / (44.103 + 944.485))|
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)|
|=||(1075.875 / 10109.88)||/||(1000.981 / 9215.612)|
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)|
|=||((1077.964 + 1817.106) / 4098.467)||/||((665.042 + 1850.919) / 3825.937)|
8. TATA = Total Accruals to Total Assets
Total accruals calculated as the change in working capital accounts other than cash less depreciation.
|=||(NetIncome_t - NonOperatingIncome_t||-||CashFlowsfromOperations_t)||/||TotalAssets_t|
|=||(97.516 - -140.96||-||123.263)||/||4098.467|
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.
Group 1 Automotive Inc has a M-score of -1.87 signals that the company is likely to be a manipulator.
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
Group 1 Automotive Inc Annual Data
Group 1 Automotive Inc Quarterly Data