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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 1.33. The lowest was -4.06. And the median was -2.38.
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 * 0.2467||+||0.528 * 1.0016||+||0.404 * 0.9975||+||0.892 * 1.0848||+||0.115 * 1.0038|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.984||+||4.679 * 0.069||-||0.327 * 1.0326|
|This Year (Sep15) TTM:||Last Year (Sep14) TTM:|
|Accounts Receivable was $88 Mil.|
Revenue was 2800.569 + 2726.48 + 2432.854 + 2538.94 = $10,499 Mil.
Gross Profit was 398.382 + 391.573 + 363.884 + 365.959 = $1,520 Mil.
Total Current Assets was $2,045 Mil.
Total Assets was $4,292 Mil.
Property, Plant and Equipment(Net PPE) was $979 Mil.
Depreciation, Depletion and Amortization(DDA) was $46 Mil.
Selling, General & Admin. Expense(SGA) was $1,109 Mil.
Total Current Liabilities was $1,982 Mil.
Long-Term Debt was $1,084 Mil.
Net Income was 45.261 + 46.31 + 35.815 + 18.677 = $146 Mil.
Non Operating Income was -107.679 + -105.219 + -94.556 + 0 = $-307 Mil.
Cash Flow from Operations was 150.293 + 22.408 + 58.167 + -73.548 = $157 Mil.
|Accounts Receivable was $329 Mil.
Revenue was 2626.448 + 2511.638 + 2260.863 + 2279.492 = $9,678 Mil.
Gross Profit was 374.709 + 369.148 + 338.122 + 321.321 = $1,403 Mil.
Total Current Assets was $1,929 Mil.
Total Assets was $3,963 Mil.
Property, Plant and Equipment(Net PPE) was $859 Mil.
Depreciation, Depletion and Amortization(DDA) was $41 Mil.
Selling, General & Admin. Expense(SGA) was $1,039 Mil.
Total Current Liabilities was $1,803 Mil.
Long-Term Debt was $938 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)|
|=||(88.153 / 10498.843)||/||(329.376 / 9678.441)|
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)|
|=||(391.573 / 9678.441)||/||(398.382 / 10498.843)|
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 - (2044.79 + 978.892) / 4292.05)||/||(1 - (1929.255 + 859.339) / 3962.509)|
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))|
|=||(40.86 / (40.86 + 859.339))||/||(46.361 / (46.361 + 978.892))|
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)|
|=||(1109.252 / 10498.843)||/||(1039.162 / 9678.441)|
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)|
|=||((1084.161 + 1981.847) / 4292.05)||/||((938.499 + 1802.639) / 3962.509)|
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|
|=||(146.063 - -307.454||-||157.32)||/||4292.05|
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 -2.78 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