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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 -3.23. And the median was -2.39.
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 * 0.9885||+||0.528 * 0.9947||+||0.404 * 1.0103||+||0.892 * 1.1143||+||0.115 * 1.0093|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9756||+||4.679 * 0.006||-||0.327 * 1.0689|
|This Year (Dec14) TTM:||Last Year (Dec13) TTM:|
|Accounts Receivable was $86 Mil.|
Revenue was 2538.94 + 2626.448 + 2511.638 + 2260.863 = $9,938 Mil.
Gross Profit was 365.959 + 374.709 + 369.148 + 338.122 = $1,448 Mil.
Total Current Assets was $2,035 Mil.
Total Assets was $4,141 Mil.
Property, Plant and Equipment(Net PPE) was $950 Mil.
Depreciation, Depletion and Amortization(DDA) was $42 Mil.
Selling, General & Admin. Expense(SGA) was $1,062 Mil.
Total Current Liabilities was $1,922 Mil.
Long-Term Debt was $1,009 Mil.
Net Income was 18.677 + 26.162 + 16.862 + 31.303 = $93 Mil.
Non Operating Income was 0 + -22.79 + -23.614 + -83.64 = $-130 Mil.
Cash Flow from Operations was -73.548 + 140.903 + -2.259 + 133.192 = $198 Mil.
|Accounts Receivable was $78 Mil.
Revenue was 2279.492 + 2340.147 + 2335.11 + 1963.832 = $8,919 Mil.
Gross Profit was 321.321 + 329.462 + 341.274 + 300.489 = $1,293 Mil.
Total Current Assets was $1,968 Mil.
Total Assets was $3,819 Mil.
Property, Plant and Equipment(Net PPE) was $796 Mil.
Depreciation, Depletion and Amortization(DDA) was $36 Mil.
Selling, General & Admin. Expense(SGA) was $977 Mil.
Total Current Liabilities was $1,865 Mil.
Long-Term Debt was $664 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)|
|=||(86.062 / 9937.889)||/||(78.131 / 8918.581)|
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)|
|=||(374.709 / 8918.581)||/||(365.959 / 9937.889)|
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 - (2035.219 + 950.388) / 4141.492)||/||(1 - (1967.938 + 796.356) / 3819.478)|
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))|
|=||(35.826 / (35.826 + 796.356))||/||(42.344 / (42.344 + 950.388))|
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)|
|=||(1061.964 / 9937.889)||/||(976.856 / 8918.581)|
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)|
|=||((1008.837 + 1922.199) / 4141.492)||/||((663.689 + 1865.176) / 3819.478)|
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|
|=||(93.004 - -130.044||-||198.288)||/||4141.492|
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 -2.38 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