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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 * 1.7106||+||0.528 * 1.306||+||0.404 * 0.8108||+||0.892 * 0.7959||+||0.115 * 0.9342|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.3064||+||4.679 * -0.0912||-||0.327 * 1.5521|
|This Year (Dec16) TTM:||Last Year (Dec15) TTM:|
|Accounts Receivable was $479 Mil.|
Revenue was 2955.068 + 2847.27 + 2714.638 + 2018.724 = $10,536 Mil.
Gross Profit was 243.264 + 248.889 + 353.62 + 197.099 = $1,043 Mil.
Total Current Assets was $2,851 Mil.
Total Assets was $9,436 Mil.
Property, Plant and Equipment(Net PPE) was $4,008 Mil.
Depreciation, Depletion and Amortization(DDA) was $363 Mil.
Selling, General & Admin. Expense(SGA) was $126 Mil.
Total Current Liabilities was $1,083 Mil.
Long-Term Debt was $2,235 Mil.
Net Income was 53.165 + 74.497 + -409.368 + 21.253 = $-260 Mil.
Non Operating Income was -3.683 + 3.874 + 3.751 + -5.888 = $-2 Mil.
Cash Flow from Operations was 158.047 + 133.898 + 303.69 + 6.636 = $602 Mil.
|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.
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)|
|=||(479.199 / 10535.7)||/||(351.978 / 13237.92)|
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)|
|=||(1711.35 / 13237.92)||/||(1042.872 / 10535.7)|
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 - (2851.009 + 4008.448) / 9435.661)||/||(1 - (1448.065 + 4115.662) / 8388.299)|
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))|
|=||(346.151 / (346.151 + 4115.662))||/||(363.027 / (363.027 + 4008.448))|
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)|
|=||(125.648 / 10535.7)||/||(120.846 / 13237.92)|
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)|
|=||((2235.137 + 1083.229) / 9435.661)||/||((1040.04 + 860.615) / 8388.299)|
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|
|=||(-260.453 - -1.946||-||602.271)||/||9435.661|
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 -2.59 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