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GuruFocus has detected 6 Warning Signs with Group 1 Automotive Inc $GPI.
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Group 1 Automotive Inc (NYSE:GPI)
Beneish M-Score
-2.27 (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.

Group 1 Automotive Inc has a M-score of -2.27 suggests that the company is not a manipulator.

GPI' s Beneish M-Score Range Over the Past 10 Years
Min: -3.21   Max: -1.56
Current: -2.27

-3.21
-1.56

During the past 13 years, the highest Beneish M-Score of Group 1 Automotive Inc was -1.56. The lowest was -3.21. And the median was -2.27.


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 * 1.0033+0.528 * 0.9848+0.404 * 0.9947+0.892 * 1.024+0.115 * 1.0038
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0201+4.679 * 0.041-0.327 * 0.9936
=-2.27

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

This Year (Dec16) TTM:Last Year (Dec15) TTM:
Accounts Receivable was $96 Mil.
Revenue was 2673.632 + 2823.176 + 2782.449 + 2608.355 = $10,888 Mil.
Gross Profit was 389.181 + 406.668 + 410.119 + 389.101 = $1,595 Mil.
Total Current Assets was $2,151 Mil.
Total Assets was $4,462 Mil.
Property, Plant and Equipment(Net PPE) was $1,126 Mil.
Depreciation, Depletion and Amortization(DDA) was $51 Mil.
Selling, General & Admin. Expense(SGA) was $1,171 Mil.
Total Current Liabilities was $2,053 Mil.
Long-Term Debt was $1,213 Mil.
Net Income was 30.828 + 35.366 + 46.58 + 34.291 = $147 Mil.
Non Operating Income was -104.235 + -108.71 + -107.56 + -100.149 = $-421 Mil.
Cash Flow from Operations was -1.755 + 213.745 + 56.792 + 116.075 = $385 Mil.
Accounts Receivable was $93 Mil.
Revenue was 2672.602 + 2800.569 + 2726.48 + 2432.854 = $10,633 Mil.
Gross Profit was 380.133 + 398.382 + 391.573 + 363.884 = $1,534 Mil.
Total Current Assets was $2,188 Mil.
Total Assets was $4,397 Mil.
Property, Plant and Equipment(Net PPE) was $1,034 Mil.
Depreciation, Depletion and Amortization(DDA) was $47 Mil.
Selling, General & Admin. Expense(SGA) was $1,121 Mil.
Total Current Liabilities was $2,039 Mil.
Long-Term Debt was $1,200 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)
=(95.754 / 10887.612) / (93.206 / 10632.505)
=0.00879477 / 0.00876614
=1.0033

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)
=(1533.972 / 10632.505) / (1595.069 / 10887.612)
=0.14427193 / 0.14650311
=0.9848

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 - (2150.587 + 1125.883) / 4461.903) / (1 - (2188.37 + 1033.981) / 4396.716)
=0.26567879 / 0.26710049
=0.9947

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
=10887.612 / 10632.505
=1.024

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))
=(47.239 / (47.239 + 1033.981)) / (51.234 / (51.234 + 1125.883))
=0.04369046 / 0.04352499
=1.0038

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)
=(1170.763 / 10887.612) / (1120.832 / 10632.505)
=0.10753166 / 0.10541561
=1.0201

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)
=((1212.809 + 2053.117) / 4461.903) / ((1199.534 + 2039.268) / 4396.716)
=0.73195809 / 0.73664117
=0.9936

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
=(147.065 - -420.654 - 384.857) / 4461.903
=0.041

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 -2.27 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.

Group 1 Automotive Inc Annual Data

Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15Dec16
DSRI 1.02480.92081.15930.55821.01711.06441.04970.98851.01231.0033
GMI 1.01760.96240.94471.07681.00761.05731.03120.99471.00990.9848
AQI 0.97550.90821.15320.90090.94010.90391.05841.01030.9570.9947
SGI 1.05090.88440.80041.21731.10361.22971.19291.11431.06991.024
DEPI 1.53371.08430.92171.03681.12420.97951.04751.00930.97631.0038
SGAI 1.00081.07451.04930.91750.96050.93850.96510.97560.98651.0201
LVGI 1.07970.99080.8521.00591.03851.0461.02611.06891.04090.9936
TATA 0.026-0.022-0.09730.13240.03180.1440.09790.07430.08230.041
M-score -2.26-2.82-2.90-2.06-2.23-1.56-1.76-2.06-2.05-2.27

Group 1 Automotive Inc Quarterly Data

Sep14Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16Dec16
DSRI 2.36620.98851.44780.95460.24671.01230.74491.03261.01411.0033
GMI 1.00620.99470.99020.99781.00161.00991.01040.99780.99360.9848
AQI 1.02521.01031.02921.02650.99750.9570.93820.94010.92140.9947
SGI 1.12831.11431.0971.09931.08481.06991.06911.05221.03691.024
DEPI 1.02191.00930.96820.99751.00380.97631.0331.03811.05981.0038
SGAI 0.96910.97560.97970.96550.9840.98650.99381.01781.01851.0201
LVGI 1.09971.06891.07421.02531.03261.04091.04921.05331.0320.9936
TATA 0.07490.07430.09710.09170.09130.08230.06790.06140.04610.041
M-score -0.77-2.06-1.54-2.00-2.68-2.05-2.37-2.16-2.26-2.27
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