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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 HollyFrontier Corp was -0.49. The lowest was -3.87. And the median was -2.46.
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 HollyFrontier Corp 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 * 0.8908||+||0.528 * 0.3888||+||0.404 * 1.1194||+||0.892 * 0.6698||+||0.115 * 1.1611|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.5743||+||4.679 * -0.0291||-||0.327 * 0.9139|
|This Year (Dec15) TTM:||Last Year (Dec14) TTM:|
|Accounts Receivable was $352 Mil.|
Revenue was 2943.559 + 3585.823 + 3701.912 + 3006.626 = $13,238 Mil.
Gross Profit was 68.28 + 441.115 + 703.752 + 498.203 = $1,711 Mil.
Total Current Assets was $1,448 Mil.
Total Assets was $8,388 Mil.
Property, Plant and Equipment(Net PPE) was $4,116 Mil.
Depreciation, Depletion and Amortization(DDA) was $346 Mil.
Selling, General & Admin. Expense(SGA) was $121 Mil.
Total Current Liabilities was $861 Mil.
Long-Term Debt was $1,040 Mil.
Net Income was -43.921 + 196.322 + 360.824 + 226.876 = $740 Mil.
Non Operating Income was 2.704 + 8.497 + 0.136 + -7.041 = $4 Mil.
Cash Flow from Operations was 76.285 + 333.401 + 323.048 + 246.892 = $980 Mil.
|Accounts Receivable was $590 Mil.
Revenue was 4283.119 + 5317.555 + 5372.6 + 4791.053 = $19,764 Mil.
Gross Profit was -221.748 + 410.705 + 426.1 + 378.467 = $994 Mil.
Total Current Assets was $2,783 Mil.
Total Assets was $9,230 Mil.
Property, Plant and Equipment(Net PPE) was $3,671 Mil.
Depreciation, Depletion and Amortization(DDA) was $363 Mil.
Selling, General & Admin. Expense(SGA) was $115 Mil.
Total Current Liabilities was $1,234 Mil.
Long-Term Debt was $1,054 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)|
|=||(351.978 / 13237.92)||/||(589.905 / 19764.327)|
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)|
|=||(441.115 / 19764.327)||/||(68.28 / 13237.92)|
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 - (1448.065 + 4115.662) / 8388.299)||/||(1 - (2782.998 + 3670.539) / 9230.047)|
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))|
|=||(363.381 / (363.381 + 3670.539))||/||(346.151 / (346.151 + 4115.662))|
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)|
|=||(120.846 / 13237.92)||/||(114.609 / 19764.327)|
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)|
|=||((1040.04 + 860.615) / 8388.299)||/||((1054.297 + 1233.994) / 9230.047)|
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|
|=||(740.101 - 4.296||-||979.626)||/||8388.299|
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.
HollyFrontier Corp has a M-score of -3.34 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
HollyFrontier Corp Annual Data
HollyFrontier Corp Quarterly Data