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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 -2.03 signals that the company is a manipulator.
During the past 13 years, the highest Beneish M-Score of Group 1 Automotive Inc was 0.31. The lowest was -3.39. 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 * 0.9567||+||0.528 * 1.0312||+||0.404 * 1.0584||+||0.892 * 1.1929||+||0.115 * 1.0475|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9651||+||4.679 * 0.0588||-||0.327 * 1.0261|
|This Year (Dec13) TTM:||Last Year (Dec12) TTM:|
|Accounts Receivable was $360 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.
Net Income was 21.721 + 32.765 + 37.388 + 22.118 = $114 Mil.
Non Operating Income was 0 + -82.536 + -79.821 + -0.789 = $-163 Mil.
Cash Flow from Operations was -76.594 + 41.658 + 25.382 + 61.926 = $52 Mil.
|Accounts Receivable was $316 Mil.
Revenue was 1938.957 + 1976.572 + 1895.826 + 1664.745 = $7,476 Mil.
Gross Profit was 280.253 + 291.231 + 285.344 + 260.424 = $1,117 Mil.
Total Current Assets was $1,566 Mil.
Total Assets was $3,023 Mil.
Property, Plant and Equipment(Net PPE) was $668 Mil.
Depreciation, Depletion and Amortization(DDA) was $32 Mil.
Selling, General & Admin. Expense(SGA) was $848 Mil.
Total Current Liabilities was $1,396 Mil.
Long-Term Debt was $555 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)|
|=||(360.214 / 8918.581)||/||(315.624 / 7476.1)|
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)|
|=||(329.462 / 7476.1)||/||(321.321 / 8918.581)|
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 - (1967.938 + 796.356) / 3819.478)||/||(1 - (1566.181 + 667.768) / 3023.015)|
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))|
|=||(31.534 / (31.534 + 667.768))||/||(35.826 / (35.826 + 796.356))|
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)|
|=||(976.856 / 8918.581)||/||(848.446 / 7476.1)|
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)|
|=||((663.689 + 1865.176) / 3819.478)||/||((555.016 + 1395.578) / 3023.015)|
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|
|=||(113.992 - -163.146||-||52.372)||/||3819.478|
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 -2.03 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