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Honda Motor Co Ltd (NYSE:HMC)
Beneish M-Score
-2.94 (As of Today)

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.

Honda Motor Co Ltd has a M-score of -3.02 suggests that the company is not a manipulator.

HMC' s Beneish M-Score Range Over the Past 10 Years
Min: -3.13   Max: -1.42
Current: -2.94

-3.13
-1.42

During the past 13 years, the highest Beneish M-Score of Honda Motor Co Ltd was -1.42. The lowest was -3.13. And the median was -2.52.


Definition

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 Honda Motor Co Ltd 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 * 0.2296+0.528 * 1.2334+0.404 * 0.9561+0.892 * 1.0708+0.115 * 2.3214
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.8325+4.679 * -0.0406-0.327 * 0.9745
=-3.02

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.

This Year (Dec15) TTM:Last Year (Dec14) TTM:
Accounts Receivable was $5,753 Mil.
Revenue was 29738.3401159 + 30140.2358432 + 29945.0688902 + 33515.4845113 = $123,339 Mil.
Gross Profit was 6804.10243762 + 6596.65278374 + 6620.7991361 + 5473.31481089 = $25,495 Mil.
Total Current Assets was $51,378 Mil.
Total Assets was $152,820 Mil.
Property, Plant and Equipment(Net PPE) was $56,954 Mil.
Depreciation, Depletion and Amortization(DDA) was $3,644 Mil.
Selling, General & Admin. Expense(SGA) was $14,869 Mil.
Total Current Liabilities was $43,117 Mil.
Long-Term Debt was $32,140 Mil.
Net Income was 1020.98080322 + 1063.28382756 + 1503.71084057 + 701.93405845 = $4,290 Mil.
Non Operating Income was 287.737904386 + 367.0651765 + 323.912491735 + 817.744996657 = $1,796 Mil.
Cash Flow from Operations was 2081.15262877 + 2410.51839571 + 3361.62872842 + 848.950741105 = $8,702 Mil.
Accounts Receivable was $23,398 Mil.
Revenue was 27571.848918 + 28063.8245783 + 29278.7976826 + 30264.2759429 = $115,179 Mil.
Gross Profit was 7077.09223597 + 6924.59067058 + 7348.57622113 + 8014.7547391 = $29,365 Mil.
Total Current Assets was $53,127 Mil.
Total Assets was $149,383 Mil.
Property, Plant and Equipment(Net PPE) was $50,771 Mil.
Depreciation, Depletion and Amortization(DDA) was $8,238 Mil.
Selling, General & Admin. Expense(SGA) was $16,678 Mil.
Total Current Liabilities was $43,374 Mil.
Long-Term Debt was $32,114 Mil.



1. DSRI = Days Sales in Receivables Index

Measured as the ratio of days’ sales in receivables in year t to year t-1.

A large increase in DSR could be indicative of revenue inflation.

DSRI=(Receivables_t / Revenue_t) / (Receivables_t-1 / Revenue_t-1)
=(5752.6780943 / 123339.129361) / (23397.6348291 / 115178.747122)
=0.04664114 / 0.20314195
=0.2296

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.

GMI=GrossMargin_t-1 / GrossMargin_t
=(GrossProfit_t-1 / Revenue_t-1) / (GrossProfit_t / Revenue_t)
=(29365.0138668 / 115178.747122) / (25494.8691684 / 123339.129361)
=0.25495167 / 0.20670544
=1.2334

3. AQI = Asset Quality Index

AQI is the ratio of asset quality in year t to year t-1.

Asset quality is measured as the ratio of non-current assets other than plant, property and equipment to total assets.

AQI=(1 - (CurrentAssets_t + PPE_t) / TotalAssets_t) / (1 - (CurrentAssets_t-1 + PPE_t-1) / TotalAssets_t-1)
=(1 - (51377.7202286 + 56953.7961935) / 152819.870925) / (1 - (53127.1511934 + 50771.3497699) / 149382.677147)
=0.29111629 / 0.30448093
=0.9561

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.

SGI=Sales_t / Sales_t-1
=Revenue_t / Revenue_t-1
=123339.129361 / 115178.747122
=1.0708

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))
=(8237.68863875 / (8237.68863875 + 50771.3497699)) / (3644.11554679 / (3644.11554679 + 56953.7961935))
=0.13960046 / 0.06013599
=2.3214

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)
=(14868.5875626 / 123339.129361) / (16677.5231826 / 115178.747122)
=0.12055045 / 0.14479688
=0.8325

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)
=((32140.3378962 + 43117.1044518) / 152819.870925) / ((32114.2978781 + 43374.0518407) / 149382.677147)
=0.49245849 / 0.50533537
=0.9745

8. TATA = Total Accruals to Total Assets

Total accruals calculated as the change in working capital accounts other than cash less depreciation.

TATA=(IncomefromContinuingOperations_t - CashFlowsfromOperations_t) / TotalAssets_t
=(NetIncome_t - NonOperatingIncome_t - CashFlowsfromOperations_t) / TotalAssets_t
=(4289.9095298 - 1796.46056928 - 8702.250494) / 152819.870925
=-0.0406

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.

Honda Motor Co Ltd has a M-score of -3.02 suggests that the company will not be a manipulator.


Related Terms

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


Historical Data

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.

Honda Motor Co Ltd Annual Data

Mar07Mar08Mar09Mar10Mar11Mar12Mar13Mar14Mar15Mar16
DSRI 0.97920.89411.00241.20690.85591.15930.99672.17480.98910.2585
GMI 1.00631.00831.11341.02610.9241.06980.99530.98541.1571.0045
AQI 0.92250.91850.94190.97810.99480.98540.97791.02850.99090.9324
SGI 1.11941.25620.86130.92441.15740.88051.08151.11020.95671.1679
DEPI 0.94690.93570.91011.00061.07171.0941.09240.89931.55360.9897
SGAI 0.98090.97471.14910.84870.99251.03870.89940.99140.90091.1188
LVGI 1.01821.00371.01080.94420.98391.01781.01151.01870.98461.0086
TATA -0.0186-0.0346-0.0169-0.1068-0.0503-0.0449-0.0267-0.0398-0.0346-0.0641
M-score -2.52-2.54-2.68-2.81-2.73-2.62-2.52-1.50-2.53-3.36

Honda Motor Co Ltd Quarterly Data

Dec13Mar14Jun14Sep14Dec14Mar15Jun15Sep15Dec15Mar16
DSRI 1.05772.41350.42891.03790.97410.94070.63570.23670.22960.2925
GMI 1.00570.98660.97190.98541.00811.1481.18731.21331.23341.0115
AQI 1.04291.02851.00190.96930.9640.99090.96480.98160.95610.9324
SGI 0.98771.00041.0151.00530.98911.00581.01041.03741.07081.032
DEPI 0.91080.9790.98691.03141.00971.43811.66881.9092.32141.1422
SGAI 0.97140.99171.00380.99381.02130.90540.8690.86860.83251.1213
LVGI 1.02511.01871.01911.01780.99290.98460.99560.98720.97451.0086
TATA -0.041-0.0409-0.0433-0.0378-0.045-0.0379-0.0389-0.0395-0.0406-0.0615
M-score -2.62-1.37-3.22-2.64-2.73-2.56-2.80-3.10-3.02-3.42
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