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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.
Group 1 Automotive Inc has a M-score of -2.16 signals that the company is a manipulator.
During the past 13 years, the highest Beneish M-Score of Group 1 Automotive Inc was 1.27. The lowest was -4.12. 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 * 0.9705||+||0.528 * 1.0215||+||0.404 * 0.9831||+||0.892 * 1.1434||+||0.115 * 1.0231|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9718||+||4.679 * 0.0494||-||0.327 * 1.0798|
|This Year (Jun14) TTM:||Last Year (Jun13) TTM:|
|Accounts Receivable was $353 Mil.|
Revenue was 2511.638 + 2260.863 + 2279.492 + 2340.147 = $9,392 Mil.
Gross Profit was 369.148 + 338.122 + 321.321 + 329.462 = $1,358 Mil.
Total Current Assets was $2,024 Mil.
Total Assets was $3,977 Mil.
Property, Plant and Equipment(Net PPE) was $838 Mil.
Depreciation, Depletion and Amortization(DDA) was $39 Mil.
Selling, General & Admin. Expense(SGA) was $1,022 Mil.
Total Current Liabilities was $1,813 Mil.
Long-Term Debt was $939 Mil.
Net Income was 16.862 + 31.303 + 21.721 + 32.765 = $103 Mil.
Non Operating Income was -23.614 + -83.64 + 0 + -82.536 = $-190 Mil.
Cash Flow from Operations was -2.259 + 133.192 + -76.594 + 41.658 = $96 Mil.
|Accounts Receivable was $318 Mil.
Revenue was 2335.11 + 1963.832 + 1938.957 + 1976.572 = $8,214 Mil.
Gross Profit was 341.274 + 300.489 + 280.253 + 291.231 = $1,213 Mil.
Total Current Assets was $1,731 Mil.
Total Assets was $3,409 Mil.
Property, Plant and Equipment(Net PPE) was $706 Mil.
Depreciation, Depletion and Amortization(DDA) was $34 Mil.
Selling, General & Admin. Expense(SGA) was $920 Mil.
Total Current Liabilities was $1,643 Mil.
Long-Term Debt was $542 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)|
|=||(353.026 / 9392.14)||/||(318.139 / 8214.471)|
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)|
|=||(338.122 / 8214.471)||/||(369.148 / 9392.14)|
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 - (2024.203 + 837.821) / 3976.89)||/||(1 - (1730.8 + 706.293) / 3409.318)|
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))|
|=||(33.853 / (33.853 + 706.293))||/||(39.207 / (39.207 + 837.821))|
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)|
|=||(1021.792 / 9392.14)||/||(919.599 / 8214.471)|
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)|
|=||((938.575 + 1813.047) / 3976.89)||/||((541.709 + 1642.842) / 3409.318)|
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|
|=||(102.651 - -189.79||-||95.997)||/||3976.89|
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