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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.
HollyFrontier Corp has a M-score of -2.09 signals that the company is a manipulator.
During the past 13 years, the highest Beneish M-Score of HollyFrontier Corp was -0.74. The lowest was -4.06. And the median was -2.23.
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 * 0.9609||+||0.528 * 2.4129||+||0.404 * 0.9824||+||0.892 * 0.998||+||0.115 * 0.8616|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9137||+||4.679 * -0.0626||-||0.327 * 1.0473|
|This Year (Jun14) TTM:||Last Year (Jun13) TTM:|
|Accounts Receivable was $799 Mil.|
Revenue was 5372.6 + 4791.053 + 4826.801 + 5327.122 = $20,318 Mil.
Gross Profit was 426.1 + 378.467 + 202.016 + 260.814 = $1,267 Mil.
Total Current Assets was $4,236 Mil.
Total Assets was $10,458 Mil.
Property, Plant and Equipment(Net PPE) was $3,493 Mil.
Depreciation, Depletion and Amortization(DDA) was $343 Mil.
Selling, General & Admin. Expense(SGA) was $120 Mil.
Total Current Liabilities was $1,968 Mil.
Long-Term Debt was $1,028 Mil.
Net Income was 176.429 + 152.061 + 62.902 + 82.29 = $474 Mil.
Non Operating Income was -0.908 + -8.478 + -1.201 + 0.159 = $-10 Mil.
Cash Flow from Operations was 326.55 + 394.929 + 67.011 + 350.648 = $1,139 Mil.
|Accounts Receivable was $833 Mil.
Revenue was 5298.848 + 4707.789 + 5147.507 + 5204.798 = $20,359 Mil.
Gross Profit was 564.498 + 650.155 + 777.527 + 1072.203 = $3,064 Mil.
Total Current Assets was $4,448 Mil.
Total Assets was $10,494 Mil.
Property, Plant and Equipment(Net PPE) was $3,258 Mil.
Depreciation, Depletion and Amortization(DDA) was $272 Mil.
Selling, General & Admin. Expense(SGA) was $132 Mil.
Total Current Liabilities was $1,880 Mil.
Long-Term Debt was $990 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)|
|=||(799.055 / 20317.576)||/||(833.236 / 20358.942)|
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)|
|=||(378.467 / 20358.942)||/||(426.1 / 20317.576)|
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 - (4236.131 + 3492.743) / 10458.383)||/||(1 - (4448.152 + 3257.831) / 10493.934)|
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))|
|=||(272.072 / (272.072 + 3257.831))||/||(343.13 / (343.13 + 3492.743))|
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)|
|=||(120.053 / 20317.576)||/||(131.665 / 20358.942)|
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)|
|=||((1027.885 + 1967.695) / 10458.383)||/||((990.236 + 1879.691) / 10493.934)|
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|
|=||(473.682 - -10.428||-||1139.138)||/||10458.383|
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 -2.09 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
HollyFrontier Corp Annual Data
HollyFrontier Corp Quarterly Data