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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 1.30. The lowest was -3.99. And the median was -2.21.
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 * 1.0326||+||0.528 * 0.9978||+||0.404 * 0.9401||+||0.892 * 1.0522||+||0.115 * 1.0381|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0178||+||4.679 * 0.0614||-||0.327 * 1.0533|
|This Year (Jun16) TTM:||Last Year (Jun15) TTM:|
|Accounts Receivable was $87 Mil.|
Revenue was 2782.449 + 2608.355 + 2672.602 + 2800.569 = $10,864 Mil.
Gross Profit was 410.119 + 389.101 + 380.133 + 398.382 = $1,578 Mil.
Total Current Assets was $2,202 Mil.
Total Assets was $4,501 Mil.
Property, Plant and Equipment(Net PPE) was $1,081 Mil.
Depreciation, Depletion and Amortization(DDA) was $49 Mil.
Selling, General & Admin. Expense(SGA) was $1,161 Mil.
Total Current Liabilities was $2,112 Mil.
Long-Term Debt was $1,251 Mil.
Net Income was 46.58 + 34.291 + -33.386 + 45.261 = $93 Mil.
Non Operating Income was -107.56 + -100.149 + -101.332 + -107.679 = $-417 Mil.
Cash Flow from Operations was 56.792 + 116.075 + -89.821 + 150.293 = $233 Mil.
|Accounts Receivable was $80 Mil.
Revenue was 2726.48 + 2432.854 + 2538.94 + 2626.448 = $10,325 Mil.
Gross Profit was 391.573 + 363.884 + 365.959 + 374.709 = $1,496 Mil.
Total Current Assets was $2,099 Mil.
Total Assets was $4,303 Mil.
Property, Plant and Equipment(Net PPE) was $965 Mil.
Depreciation, Depletion and Amortization(DDA) was $45 Mil.
Selling, General & Admin. Expense(SGA) was $1,084 Mil.
Total Current Liabilities was $2,011 Mil.
Long-Term Debt was $1,042 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)|
|=||(87.125 / 10863.975)||/||(80.188 / 10324.722)|
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)|
|=||(1496.125 / 10324.722)||/||(1577.735 / 10863.975)|
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 - (2201.957 + 1081.232) / 4500.8)||/||(1 - (2099.365 + 965.363) / 4302.974)|
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))|
|=||(45.296 / (45.296 + 965.363))||/||(48.786 / (48.786 + 1081.232))|
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)|
|=||(1161.481 / 10863.975)||/||(1084.473 / 10324.722)|
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)|
|=||((1250.94 + 2111.874) / 4500.8)||/||((1041.852 + 2010.599) / 4302.974)|
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|
|=||(92.746 - -416.72||-||233.339)||/||4500.8|
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 -2.16 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