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Garmin Ltd (NAS:GRMN)
Beneish M-Score
-2.71 (As of Today)

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.

Garmin Ltd has a M-score of -2.71 suggests that the company is not a manipulator.

GRMN' s 10-Year Beneish M-Score Range
Min: -2.91   Max: -1.19
Current: -2.71

-2.91
-1.19

During the past 13 years, the highest Beneish M-Score of Garmin Ltd was -1.19. The lowest was -2.91. And the median was -2.59.


Definition

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 Garmin Ltd 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 * 0.9259+0.528 * 0.9567+0.404 * 0.9742+0.892 * 1.0907+0.115 * 1.0528
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0153+4.679 * -0.0332-0.327 * 1.1866
=-2.71

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.

This Year (Dec14) TTM:Last Year (Dec13) TTM:
Accounts Receivable was $570 Mil.
Revenue was 803.306 + 706.283 + 777.848 + 583.221 = $2,871 Mil.
Gross Profit was 430.848 + 398.246 + 444.485 + 330.834 = $1,604 Mil.
Total Current Assets was $2,511 Mil.
Total Assets was $4,693 Mil.
Property, Plant and Equipment(Net PPE) was $431 Mil.
Depreciation, Depletion and Amortization(DDA) was $77 Mil.
Selling, General & Admin. Expense(SGA) was $519 Mil.
Total Current Liabilities was $1,033 Mil.
Long-Term Debt was $0 Mil.
Net Income was 210.245 + -146.834 + 181.983 + 118.818 = $364 Mil.
Non Operating Income was 17.094 + -12.186 + -19.704 + 12.33 = $-2 Mil.
Cash Flow from Operations was 145.017 + 142.342 + 164.179 + 71.173 = $523 Mil.
Accounts Receivable was $565 Mil.
Revenue was 759.695 + 643.637 + 696.563 + 531.957 = $2,632 Mil.
Gross Profit was 394.638 + 352.889 + 383.64 + 276.133 = $1,407 Mil.
Total Current Assets was $2,596 Mil.
Total Assets was $4,880 Mil.
Property, Plant and Equipment(Net PPE) was $415 Mil.
Depreciation, Depletion and Amortization(DDA) was $79 Mil.
Selling, General & Admin. Expense(SGA) was $468 Mil.
Total Current Liabilities was $905 Mil.
Long-Term Debt was $0 Mil.



1. DSRI = Days Sales in Receivables Index

Measured as the ratio of days’ sales in receivables in year t to year t-1.

A large increase in DSR could be indicative of revenue inflation.

DSRI=(Receivables_t / Revenue_t) / (Receivables_t-1 / Revenue_t-1)
=(570.191 / 2870.658) / (564.586 / 2631.852)
=0.19862728 / 0.21452042
=0.9259

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.

GMI=GrossMargin_t-1 / GrossMargin_t
=(GrossProfit_t-1 / Revenue_t-1) / (GrossProfit_t / Revenue_t)
=(398.246 / 2631.852) / (430.848 / 2870.658)
=0.53471852 / 0.55890078
=0.9567

3. AQI = Asset Quality Index

AQI is the ratio of asset quality in year t to year t-1.

Asset quality is measured as the ratio of non-current assets other than plant, property and equipment to total assets.

AQI=(1 - (CurrentAssets_t + PPE_t) / TotalAssets_t) / (1 - (CurrentAssets_t-1 + PPE_t-1) / TotalAssets_t-1)
=(1 - (2510.976 + 430.887) / 4693.303) / (1 - (2595.636 + 414.848) / 4879.603)
=0.37317855 / 0.38304735
=0.9742

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.

SGI=Sales_t / Sales_t-1
=Revenue_t / Revenue_t-1
=2870.658 / 2631.852
=1.0907

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))
=(78.804 / (78.804 + 414.848)) / (77.015 / (77.015 + 430.887))
=0.15963472 / 0.15163358
=1.0528

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)
=(518.666 / 2870.658) / (468.346 / 2631.852)
=0.18067844 / 0.17795302
=1.0153

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)
=((0 + 1033.261) / 4693.303) / ((0 + 905.304) / 4879.603)
=0.22015647 / 0.18552821
=1.1866

8. TATA = Total Accruals to Total Assets

Total accruals calculated as the change in working capital accounts other than cash less depreciation.

TATA=(IncomefromContinuingOperations_t - CashFlowsfromOperations_t) / TotalAssets_t
=(NetIncome_t - NonOperatingIncome_t - CashFlowsfromOperations_t) / TotalAssets_t
=(364.212 - -2.466 - 522.711) / 4693.303
=-0.0332

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.

Garmin Ltd has a M-score of -2.71 suggests that the company will not be a manipulator.


Related Terms

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


Historical Data

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.

Garmin Ltd Annual Data

Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14
DSRI 1.15211.36721.31670.70841.39830.93640.79271.00950.9650.9259
GMI 1.03591.04671.08111.03480.90720.97921.03150.91610.99060.9567
AQI 1.01450.89680.70640.96861.50451.0291.24251.17480.98540.9742
SGI 1.34781.72611.79271.09870.84330.91291.02550.98450.96911.0907
DEPI 0.85731.30011.030.97590.83470.99030.98051.02161.13291.0528
SGAI 1.47021.01851.0311.11431.02541.12851.09641.06240.95031.0153
LVGI 0.90971.24131.36760.67031.09720.93621.14440.98270.98361.1866
TATA 0.03620.07810.0437-0.05-0.1018-0.0258-0.0669-0.0265-0.0127-0.0332
M-score -1.90-1.19-1.47-2.80-2.63-2.74-2.91-2.59-2.58-2.71

Garmin Ltd Quarterly Data

Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14Dec14
DSRI 0.92141.00951.09281.06341.01160.9650.95150.9910.940.9259
GMI 0.91160.91610.92720.99740.9990.99060.97580.94710.94650.9567
AQI 1.20631.17481.11941.06811.07810.98541.0090.95640.95470.9742
SGI 1.06330.98450.95860.93620.92440.96910.99711.03561.07061.0907
DEPI 0.86291.02161.09761.28661.06381.13291.12611.07081.21951.0528
SGAI 1.05551.06241.03610.98481.0040.95030.94470.96680.9641.0153
LVGI 0.90490.98270.96310.95721.05840.98361.11111.05661.19141.1866
TATA -0.0261-0.0265-0.0123-0.0184-0.0197-0.0127-0.01330.0073-0.0456-0.0332
M-score -2.58-2.59-2.46-2.49-2.61-2.58-2.61-2.47-2.76-2.71
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