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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 1.89. The lowest was -4.61. And the median was -2.36.
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 * 1.1136||+||0.528 * 0.9061||+||0.404 * 0.991||+||0.892 * 0.6906||+||0.115 * 1.0009|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.5164||+||4.679 * -0.1114||-||0.327 * 1.3248|
|This Year (Jun16) TTM:||Last Year (Jun15) TTM:|
|Accounts Receivable was $482 Mil.|
Revenue was 2714.638 + 2018.724 + 2943.559 + 3585.823 = $11,263 Mil.
Gross Profit was 353.62 + 197.099 + 68.28 + 441.115 = $1,060 Mil.
Total Current Assets was $2,118 Mil.
Total Assets was $8,660 Mil.
Property, Plant and Equipment(Net PPE) was $3,954 Mil.
Depreciation, Depletion and Amortization(DDA) was $357 Mil.
Selling, General & Admin. Expense(SGA) was $120 Mil.
Total Current Liabilities was $1,049 Mil.
Long-Term Debt was $1,678 Mil.
Net Income was -409.368 + 21.253 + -43.921 + 196.322 = $-236 Mil.
Non Operating Income was 3.751 + -5.888 + 2.704 + 8.497 = $9 Mil.
Cash Flow from Operations was 303.69 + 6.636 + 76.285 + 333.401 = $720 Mil.
|Accounts Receivable was $626 Mil.
Revenue was 3701.912 + 3006.626 + 4283.119 + 5317.555 = $16,309 Mil.
Gross Profit was 703.752 + 498.203 + -221.748 + 410.705 = $1,391 Mil.
Total Current Assets was $2,520 Mil.
Total Assets was $9,145 Mil.
Property, Plant and Equipment(Net PPE) was $3,868 Mil.
Depreciation, Depletion and Amortization(DDA) was $349 Mil.
Selling, General & Admin. Expense(SGA) was $115 Mil.
Total Current Liabilities was $1,240 Mil.
Long-Term Debt was $933 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)|
|=||(481.508 / 11262.744)||/||(626.107 / 16309.212)|
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)|
|=||(1390.912 / 16309.212)||/||(1060.114 / 11262.744)|
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 - (2118.098 + 3954.044) / 8659.717)||/||(1 - (2519.539 + 3868.395) / 9145.286)|
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))|
|=||(349.258 / (349.258 + 3868.395))||/||(356.639 / (356.639 + 3954.044))|
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)|
|=||(120.436 / 11262.744)||/||(115.007 / 16309.212)|
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)|
|=||((1678.123 + 1048.554) / 8659.717)||/||((933.162 + 1240.491) / 9145.286)|
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|
|=||(-235.714 - 9.064||-||720.012)||/||8659.717|
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 -3.42 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