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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 -1.56. The lowest was -3.21. And the median was -2.27.
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|
|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
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)|
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)|
|=||(1533.972 / 10632.505)||/||(1595.069 / 10887.612)|
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 - (2150.587 + 1125.883) / 4461.903)||/||(1 - (2188.37 + 1033.981) / 4396.716)|
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))|
|=||(47.239 / (47.239 + 1033.981))||/||(51.234 / (51.234 + 1125.883))|
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)|
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)|
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|
|=||(147.065 - -420.654||-||384.857)||/||4461.903|
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.
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