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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 * 0.7449||+||0.528 * 1.0104||+||0.404 * 0.9382||+||0.892 * 1.0691||+||0.115 * 1.033|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9938||+||4.679 * 0.0679||-||0.327 * 1.0492|
|This Year (Mar16) TTM:||Last Year (Mar15) TTM:|
|Accounts Receivable was $89 Mil.|
Revenue was 2608.355 + 2672.602 + 2800.569 + 2726.48 = $10,808 Mil.
Gross Profit was 389.101 + 380.133 + 398.382 + 391.573 = $1,559 Mil.
Total Current Assets was $2,254 Mil.
Total Assets was $4,534 Mil.
Property, Plant and Equipment(Net PPE) was $1,064 Mil.
Depreciation, Depletion and Amortization(DDA) was $48 Mil.
Selling, General & Admin. Expense(SGA) was $1,143 Mil.
Total Current Liabilities was $2,103 Mil.
Long-Term Debt was $1,257 Mil.
Net Income was 34.291 + -33.386 + 45.261 + 46.31 = $92 Mil.
Non Operating Income was -100.149 + -101.332 + -107.679 + -105.219 = $-414 Mil.
Cash Flow from Operations was 116.075 + -89.821 + 150.293 + 22.408 = $199 Mil.
|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.
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)|
|=||(89.279 / 10808.006)||/||(112.105 / 10109.88)|
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)|
|=||(1473.7 / 10109.88)||/||(1559.189 / 10808.006)|
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 - (2254.079 + 1063.852) / 4533.846)||/||(1 - (1982.489 + 944.485) / 4098.467)|
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))|
|=||(44.103 / (44.103 + 944.485))||/||(48.019 / (48.019 + 1063.852))|
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)|
|=||(1143.027 / 10808.006)||/||(1075.875 / 10109.88)|
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)|
|=||((1256.679 + 2103.353) / 4533.846)||/||((1077.964 + 1817.106) / 4098.467)|
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|
|=||(92.476 - -414.379||-||198.955)||/||4533.846|
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 -2.37 suggests that the company will not 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