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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 -1.85 signals that the company is a manipulator.
During the past 13 years, the highest Beneish M-Score of HollyFrontier Corp was -0.52. The lowest was -3.87. 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 * 1.1497||+||0.528 * 1.9472||+||0.404 * 1.0663||+||0.892 * 1.0035||+||0.115 * 0.861|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9955||+||4.679 * -0.0109||-||0.327 * 0.9176|
|This Year (Dec13) TTM:||Last Year (Dec12) TTM:|
|Accounts Receivable was $818 Mil.|
Revenue was 4826.801 + 5327.122 + 5298.848 + 4707.789 = $20,161 Mil.
Gross Profit was 202.016 + 260.814 + 564.498 + 650.155 = $1,677 Mil.
Total Current Assets was $3,896 Mil.
Total Assets was $10,057 Mil.
Property, Plant and Equipment(Net PPE) was $3,395 Mil.
Depreciation, Depletion and Amortization(DDA) was $303 Mil.
Selling, General & Admin. Expense(SGA) was $128 Mil.
Total Current Liabilities was $1,674 Mil.
Long-Term Debt was $998 Mil.
Net Income was 62.902 + 82.29 + 256.981 + 333.669 = $736 Mil.
Non Operating Income was -1.201 + 0.159 + -23.198 + 0.059 = $-24 Mil.
Cash Flow from Operations was 67.011 + 350.648 + 202.952 + 248.563 = $869 Mil.
|Accounts Receivable was $709 Mil.
Revenue was 5147.507 + 5204.798 + 4806.681 + 4931.738 = $20,091 Mil.
Gross Profit was 777.527 + 1072.203 + 902.191 + 503.194 = $3,255 Mil.
Total Current Assets was $4,470 Mil.
Total Assets was $10,329 Mil.
Property, Plant and Equipment(Net PPE) was $3,195 Mil.
Depreciation, Depletion and Amortization(DDA) was $243 Mil.
Selling, General & Admin. Expense(SGA) was $128 Mil.
Total Current Liabilities was $1,654 Mil.
Long-Term Debt was $1,336 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)|
|=||(818.178 / 20160.56)||/||(709.187 / 20090.724)|
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)|
|=||(260.814 / 20090.724)||/||(202.016 / 20160.56)|
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 - (3896.444 + 3394.596) / 10056.739)||/||(1 - (4470.265 + 3194.7) / 10328.997)|
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))|
|=||(242.868 / (242.868 + 3194.7))||/||(303.446 / (303.446 + 3394.596))|
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)|
|=||(127.963 / 20160.56)||/||(128.101 / 20090.724)|
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)|
|=||((997.519 + 1674.49) / 10056.739)||/||((1336.238 + 1654.444) / 10328.997)|
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|
|=||(735.842 - -24.181||-||869.174)||/||10056.739|
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 -1.85 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