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Group 1 Automotive Inc (NYSE:GPI)
Beneish M-Score
-1.08 (As of Today)

Warning Sign:

Beneish M-Score -1.08 higher than -2.22, which implies that it might have manipulated its financial results.

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.

Group 1 Automotive Inc has a M-score of -1.08 signals that the company is a manipulator.

GPI' s 10-Year Beneish M-Score Range
Min: -4.06   Max: 1.33
Current: -1.08

-4.06
1.33

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 -2.39.


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 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 * 2.3662+0.528 * 1.0062+0.404 * 1.0252+0.892 * 1.1283+0.115 * 1.0219
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9691+4.679 * 0.0078-0.327 * 1.0997
=-1.08

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.

This Year (Sep14) TTM:Last Year (Sep13) TTM:
Accounts Receivable was $329 Mil.
Revenue was 2626.448 + 2511.638 + 2260.863 + 2279.492 = $9,678 Mil.
Gross Profit was 374.709 + 369.148 + 338.122 + 321.321 = $1,403 Mil.
Total Current Assets was $1,929 Mil.
Total Assets was $3,963 Mil.
Property, Plant and Equipment(Net PPE) was $859 Mil.
Depreciation, Depletion and Amortization(DDA) was $41 Mil.
Selling, General & Admin. Expense(SGA) was $1,039 Mil.
Total Current Liabilities was $1,803 Mil.
Long-Term Debt was $938 Mil.
Net Income was 26.162 + 16.862 + 31.303 + 21.721 = $96 Mil.
Non Operating Income was -22.79 + -23.614 + -83.64 + 0 = $-130 Mil.
Cash Flow from Operations was 140.903 + -2.259 + 133.192 + -76.594 = $195 Mil.
Accounts Receivable was $123 Mil.
Revenue was 2340.147 + 2335.11 + 1963.832 + 1938.957 = $8,578 Mil.
Gross Profit was 329.462 + 341.274 + 300.489 + 280.253 = $1,251 Mil.
Total Current Assets was $1,708 Mil.
Total Assets was $3,410 Mil.
Property, Plant and Equipment(Net PPE) was $717 Mil.
Depreciation, Depletion and Amortization(DDA) was $35 Mil.
Selling, General & Admin. Expense(SGA) was $950 Mil.
Total Current Liabilities was $1,585 Mil.
Long-Term Debt was $560 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)
=(329.376 / 9678.441) / (123.376 / 8578.046)
=0.03403193 / 0.01438276
=2.3662

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)
=(369.148 / 8578.046) / (374.709 / 9678.441)
=0.14589313 / 0.14499236
=1.0062

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 - (1929.255 + 859.339) / 3962.509) / (1 - (1707.975 + 716.514) / 3409.908)
=0.29625548 / 0.28898698
=1.0252

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
=9678.441 / 8578.046
=1.1283

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))
=(34.85 / (34.85 + 716.514)) / (40.86 / (40.86 + 859.339))
=0.04638231 / 0.04538996
=1.0219

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)
=(1039.162 / 9678.441) / (950.38 / 8578.046)
=0.10736874 / 0.11079213
=0.9691

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)
=((938.499 + 1802.639) / 3962.509) / ((560.427 + 1584.517) / 3409.908)
=0.69176827 / 0.62903281
=1.0997

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
=(96.048 - -130.044 - 195.242) / 3962.509
=0.0078

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 -1.08 signals that the company is likely to 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 own currency.

Group 1 Automotive Inc Annual Data

Dec04Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13
DSRI 1.00140.96720.9251.02480.92081.15930.9940.57121.06441.019
GMI 1.04610.97980.98491.01760.96240.94471.07681.00761.05731.0312
AQI 1.02291.03411.08040.97550.90821.15320.90090.94010.90391.0584
SGI 1.20281.09841.01911.05090.88440.80041.21731.10361.22971.1929
DEPI 0.99190.81271.54811.53371.08430.92171.03681.12420.97951.0475
SGAI 0.9961.00430.9791.00081.07451.04930.91750.96050.93850.9651
LVGI 1.050.99171.05441.07970.99080.86680.98871.03851.0461.0261
TATA 0.0265-0.16560.01750.0327-0.1035-0.16660.05570.03180.1440.0163
M-score -2.16-3.21-2.38-2.22-3.20-3.23-2.01-2.64-1.56-2.17

Group 1 Automotive Inc Quarterly Data

Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14
DSRI 1.36881.12861.06440.58070.95311.05011.0190.97470.50442.3662
GMI 1.02411.04621.05731.05971.04251.03621.03121.03121.02151.0062
AQI 0.88320.83430.90391.0071.03361.07561.05840.9640.98311.0252
SGI 1.16841.21581.22971.22731.21571.19751.19291.18531.14341.1283
DEPI 1.05181.02790.97950.98570.94940.95921.04751.03371.02311.0219
SGAI 0.96050.93670.93850.94830.95780.97060.96510.95670.97180.9691
LVGI 1.09641.08991.0461.03861.00210.99361.02610.99790.86531.0997
TATA 0.13180.160.1440.08950.07860.08190.05880.06420.04940.0078
M-score -1.43-1.48-1.56-2.22-1.93-1.82-1.97-2.02-2.52-1.08
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