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Honda Motor Co Ltd (NYSE:HMC)
Beneish M-Score
-1.34 (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 -1.57 signals that the company is a manipulator.

HMC' s 10-Year Beneish M-Score Range
Min: -3.13   Max: -1.34
Current: -1.34

-3.13
-1.34

During the past 13 years, the highest Beneish M-Score of Honda Motor Co Ltd was -1.34. The lowest was -3.13. And the median was -2.62.


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 * 2.2468+0.528 * 1.0305+0.404 * 0.9298+0.892 * 0.9533+0.115 * 1.073
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0831+4.679 * -0.0379-0.327 * 1.0076
=-1.57

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

This Year (Mar15) TTM:Last Year (Mar14) TTM:
Accounts Receivable was $24,251 Mil.
Revenue was 33515.4845113 + 27571.848918 + 28063.8245783 + 29278.7976826 = $118,430 Mil.
Gross Profit was 5473.31481089 + 7077.09223597 + 6924.59067058 + 7348.57622113 = $26,824 Mil.
Total Current Assets was $52,296 Mil.
Total Assets was $153,046 Mil.
Property, Plant and Equipment(Net PPE) was $54,196 Mil.
Depreciation, Depletion and Amortization(DDA) was $5,747 Mil.
Selling, General & Admin. Expense(SGA) was $15,356 Mil.
Total Current Liabilities was $44,031 Mil.
Long-Term Debt was $32,612 Mil.
Net Income was 701.93405845 + 1144.08501944 + 1320.89434837 + 1435.50692759 = $4,602 Mil.
Non Operating Income was 817.744996657 + 125.340147314 + 124.29055617 + 0.30373426583 = $1,068 Mil.
Cash Flow from Operations was 848.950741105 + 2185.91842498 + 2817.69632406 + 3475.02373536 = $9,328 Mil.
Accounts Receivable was $11,322 Mil.
Revenue was 36748.9349228 + 29198.6178233 + 29132.3556093 + 29146.8606983 = $124,227 Mil.
Gross Profit was 6394.33261677 + 7848.85946259 + 7452.96845076 + 7298.66817504 = $28,995 Mil.
Total Current Assets was $54,223 Mil.
Total Assets was $156,815 Mil.
Property, Plant and Equipment(Net PPE) was $51,289 Mil.
Depreciation, Depletion and Amortization(DDA) was $5,882 Mil.
Selling, General & Admin. Expense(SGA) was $14,872 Mil.
Total Current Liabilities was $46,432 Mil.
Long-Term Debt was $31,508 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)
=(24250.5430065 / 118429.95569) / (11321.78034 / 124226.769054)
=0.20476697 / 0.09113801
=2.2468

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)
=(7077.09223597 / 124226.769054) / (5473.31481089 / 118429.95569)
=0.23340242 / 0.22649315
=1.0305

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 - (52295.9105275 + 54195.8145929) / 153045.50457) / (1 - (54222.7672464 + 51289.319914) / 156814.911081)
=0.3041826 / 0.32715527
=0.9298

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
=118429.95569 / 124226.769054
=0.9533

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))
=(5881.71632338 / (5881.71632338 + 51289.319914)) / (5747.30493241 / (5747.30493241 + 54195.8145929))
=0.1028793 / 0.09587931
=1.073

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)
=(15356.3901292 / 118429.95569) / (14871.506428 / 124226.769054)
=0.12966643 / 0.11971258
=1.0831

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)
=((32611.7555204 + 44030.6990768) / 153045.50457) / ((31507.836623 + 46431.5028337) / 156814.911081)
=0.50078214 / 0.49701485
=1.0076

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
=(4602.42035385 - 1067.67943441 - 9327.58922552) / 153045.50457
=-0.0379

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 -1.57 signals that the company is likely to 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

Mar06Mar07Mar08Mar09Mar10Mar11Mar12Mar13Mar14Mar15
DSRI 1.06290.97920.89411.00241.20690.85591.15930.99672.09791.0253
GMI 1.03251.00631.00831.11341.02610.9241.06980.99531.09991.0367
AQI 0.99790.92250.91850.94190.97810.99480.98670.97661.09610.9298
SGI 1.02741.11941.25620.86130.92441.15740.88051.08151.17240.9059
DEPI 0.98790.94690.93570.91011.00061.03161.09361.13511.21251.1523
SGAI 0.95560.98090.97471.14910.84870.99251.03870.89940.82611.0811
LVGI 0.8871.01821.00371.01080.94420.98391.01721.01090.99661.0076
TATA -0.0143-0.0272-0.044-0.0169-0.1068-0.0526-0.0469-0.02670.0048-0.0346
M-score -2.41-2.56-2.59-2.68-2.81-2.75-2.63-2.52-1.15-2.71

Honda Motor Co Ltd Quarterly Data

Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14Dec14Mar15
DSRI 0.90862.04750.94250.98841.05770.4520.40660.98330.92222.2468
GMI 0.98110.99471.02541.01471.00571.09911.08261.09921.12711.0305
AQI 0.94930.97661.01351.02961.04291.09611.00190.96930.9640.9298
SGI 1.20361.17681.06151.020.98771.05551.07091.06111.04480.9533
DEPI 1.04991.05431.030.99620.9981.31851.26611.30551.26091.073
SGAI 0.86840.89820.93360.95590.97140.8290.83960.82870.85151.0831
LVGI 1.04651.01091.0261.03141.02510.99661.01911.01780.99291.0076
TATA -0.0304-0.0294-0.035-0.0461-0.03950.00380.00170.00680.0007-0.0379
M-score -2.54-1.49-2.62-2.67-2.61-2.76-2.86-2.31-2.40-1.57
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