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Beneish M-Score -1.08 higher than -2.22, which implies that it might have manipulated its financial results.
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 -1.08 signals that the company is a 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 -2.39.
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 * 2.3662||+||0.528 * 1.0062||+||0.404 * 1.0252||+||0.892 * 1.1283||+||0.115 * 1.0219|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9691||+||4.679 * 0.0078||-||0.327 * 1.0997|
|This Year (Sep14) TTM:||Last Year (Sep13) TTM:|
|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.
Net Income was 26.162 + 16.862 + 31.303 + 21.721 = $96 Mil.
Non Operating Income was -22.79 + -23.614 + -83.64 + 0 = $-130 Mil.
Cash Flow from Operations was 140.903 + -2.259 + 133.192 + -76.594 = $195 Mil.
|Accounts Receivable was $123 Mil.
Revenue was 2340.147 + 2335.11 + 1963.832 + 1938.957 = $8,578 Mil.
Gross Profit was 329.462 + 341.274 + 300.489 + 280.253 = $1,251 Mil.
Total Current Assets was $1,708 Mil.
Total Assets was $3,410 Mil.
Property, Plant and Equipment(Net PPE) was $717 Mil.
Depreciation, Depletion and Amortization(DDA) was $35 Mil.
Selling, General & Admin. Expense(SGA) was $950 Mil.
Total Current Liabilities was $1,585 Mil.
Long-Term Debt was $560 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)|
|=||(329.376 / 9678.441)||/||(123.376 / 8578.046)|
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)|
|=||(369.148 / 8578.046)||/||(374.709 / 9678.441)|
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 - (1929.255 + 859.339) / 3962.509)||/||(1 - (1707.975 + 716.514) / 3409.908)|
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))|
|=||(34.85 / (34.85 + 716.514))||/||(40.86 / (40.86 + 859.339))|
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)|
|=||(1039.162 / 9678.441)||/||(950.38 / 8578.046)|
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)|
|=||((938.499 + 1802.639) / 3962.509)||/||((560.427 + 1584.517) / 3409.908)|
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|
|=||(96.048 - -130.044||-||195.242)||/||3962.509|
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 -1.08 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