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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.
Honda Motor Co Ltd has a M-score of -2.63 suggests that the company is not a manipulator.
During the past 13 years, the highest Beneish M-Score of Honda Motor Co Ltd was -2.22. The lowest was -3.03. And the median was -2.57.
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 * 1.0293||+||0.528 * 0.9718||+||0.404 * 1.0019||+||0.892 * 1.0514||+||0.115 * 0.9762|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.004||+||4.679 * -0.0434||-||0.327 * 1.0191|
|This Year (Jun14) TTM:||Last Year (Jun13) TTM:|
|Accounts Receivable was $10,308 Mil.|
Revenue was 29371.7220366 + 30229.4208359 + 29113.915633 + 29561.4298865 = $118,276 Mil.
Gross Profit was 7371.89895813 + 8005.5242148 + 7826.09072773 + 7562.73908152 = $30,766 Mil.
Total Current Assets was $54,653 Mil.
Total Assets was $152,229 Mil.
Property, Plant and Equipment(Net PPE) was $50,304 Mil.
Depreciation, Depletion and Amortization(DDA) was $8,066 Mil.
Selling, General & Admin. Expense(SGA) was $16,985 Mil.
Total Current Liabilities was $45,133 Mil.
Long-Term Debt was $31,501 Mil.
Net Income was 1440.06290545 + 1664.17458861 + 1549.05985871 + 1231.13429477 = $5,884 Mil.
Non Operating Income was 0.304698250442 + 58.2580179195 + -132.352232534 + -91.5822849545 = $-165 Mil.
Cash Flow from Operations was 3486.05268331 + 3500.88816881 + 1917.82076117 + 3756.89884423 = $12,662 Mil.
|Accounts Receivable was $9,525 Mil.
Revenue was 28433.9289477 + 28079.1341885 + 27238.3390599 + 28745.725387 = $112,497 Mil.
Gross Profit was 7120.14286718 + 7103.29589394 + 7020.53717802 + 7194.39839014 = $28,438 Mil.
Total Current Assets was $53,154 Mil.
Total Assets was $142,449 Mil.
Property, Plant and Equipment(Net PPE) was $45,141 Mil.
Depreciation, Depletion and Amortization(DDA) was $7,040 Mil.
Selling, General & Admin. Expense(SGA) was $16,091 Mil.
Total Current Liabilities was $41,116 Mil.
Long-Term Debt was $29,251 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)|
|=||(10307.5879693 / 118276.488392)||/||(9524.5251974 / 112497.127583)|
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)|
|=||(8005.5242148 / 112497.127583)||/||(7371.89895813 / 118276.488392)|
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 - (54652.8798899 + 50303.5187733) / 152229.418125)||/||(1 - (53154.404904 + 45140.7101221) / 142448.968126)|
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))|
|=||(7039.73373836 / (7039.73373836 + 45140.7101221))||/||(8066.41858571 / (8066.41858571 + 50303.5187733))|
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)|
|=||(16985.1119656 / 118276.488392)||/||(16091.4654095 / 112497.127583)|
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)|
|=||((31501.4940043 + 45133.1334775) / 152229.418125)||/||((29250.5793946 + 41116.4909253) / 142448.968126)|
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|
|=||(5884.43164754 - -165.371801319||-||12661.6604575)||/||152229.418125|
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 -2.63 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
Honda Motor Co Ltd Annual Data
Honda Motor Co Ltd Quarterly Data