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Honda Motor Co Ltd (NYSE:HMC)
Beneish M-Score
-3.43 (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 -3.43 suggests that the company is not a manipulator.

HMC' s Beneish M-Score Range Over the Past 10 Years
Min: -3.43   Max: -1.09
Current: -3.43

-3.43
-1.09

During the past 13 years, the highest Beneish M-Score of Honda Motor Co Ltd was -1.09. The lowest was -3.43. 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 * 0.2937+0.528 * 1.003+0.404 * 0.9324+0.892 * 1.028+0.115 * 1.1107
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.1346+4.679 * -0.0615-0.327 * 1.0086
=-3.43

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

This Year (Mar16) TTM:Last Year (Mar15) TTM:
Accounts Receivable was $7,320 Mil.
Revenue was 32390.2766008 + 29738.3401159 + 30140.2358432 + 29945.0688902 = $122,214 Mil.
Gross Profit was 7344.67824358 + 6804.10243762 + 6596.65278374 + 6620.7991361 = $27,366 Mil.
Total Current Assets was $55,269 Mil.
Total Assets was $161,419 Mil.
Property, Plant and Equipment(Net PPE) was $60,370 Mil.
Depreciation, Depletion and Amortization(DDA) was $5,532 Mil.
Selling, General & Admin. Expense(SGA) was $17,769 Mil.
Total Current Liabilities was $48,439 Mil.
Long-Term Debt was $33,088 Mil.
Net Income was -827.438177235 + 1020.98080322 + 1063.28382756 + 1503.71084057 = $2,761 Mil.
Non Operating Income was 22.8191021653 + 287.737904386 + 367.0651765 + 323.912491735 = $1,002 Mil.
Cash Flow from Operations was 3828.33163762 + 2081.15262877 + 2410.51839571 + 3361.62872842 = $11,682 Mil.
Accounts Receivable was $24,251 Mil.
Revenue was 29000.618799 + 29314.5261655 + 29154.4295266 + 31419.2816391 = $118,889 Mil.
Gross Profit was 6536.34509882 + 6820.00078778 + 6436.62550023 + 6908.78859997 = $26,702 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 $5,573 Mil.
Selling, General & Admin. Expense(SGA) was $15,235 Mil.
Total Current Liabilities was $44,031 Mil.
Long-Term Debt was $32,612 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)
=(7320.47777551 / 122213.92145) / (24250.5430065 / 118888.85613)
=0.05989889 / 0.20397659
=0.2937

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)
=(26701.7599868 / 118888.85613) / (27366.232601 / 122213.92145)
=0.2245943 / 0.22392075
=1.003

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 - (55269.0342924 + 60369.8961408) / 161418.751334) / (1 - (52295.9105275 + 54195.8145929) / 153045.50457)
=0.28360906 / 0.3041826
=0.9324

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
=122213.92145 / 118888.85613
=1.028

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))
=(5572.61223518 / (5572.61223518 + 54195.8145929)) / (5532.18104845 / (5532.18104845 + 60369.8961408))
=0.09323672 / 0.08394547
=1.1107

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)
=(17768.666665 / 122213.92145) / (15234.6567125 / 118888.85613)
=0.14538987 / 0.12814201
=1.1346

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)
=((33087.5033317 + 48439.4638529) / 161418.751334) / ((32611.7555204 + 44030.6990768) / 153045.50457)
=0.50506503 / 0.50078214
=1.0086

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
=(2760.53729412 - 1001.53467479 - 11681.6313905) / 161418.751334
=-0.0615

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 -3.43 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 0.97920.89411.00241.20690.85591.15932.33840.94430.97090.2585
GMI 1.00631.00831.11341.02610.9241.06980.99530.98541.1571.0045
AQI 0.92250.91850.94190.97810.99480.98671.05841.01150.92980.9324
SGI 1.11941.25620.86130.92441.15740.88051.08151.11020.95671.1679
DEPI 0.94690.93570.91011.00061.07171.0941.13730.89241.50380.9897
SGAI 0.98090.97471.14910.84870.99251.03870.89940.99140.90091.1188
LVGI 1.01821.00371.01080.94420.98391.01720.98771.02011.00761.0086
TATA -0.0186-0.0346-0.0169-0.1068-0.0503-0.0449-0.0257-0.0388-0.0346-0.0641
M-score -2.52-2.54-2.68-2.81-2.73-2.62-1.24-2.64-2.58-3.36

Honda Motor Co Ltd Quarterly Data

Dec13Mar14Jun14Sep14Dec14Mar15Jun15Sep15Dec15Mar16
DSRI 1.05770.99320.39970.95820.8860.97050.69190.26240.2620.2937
GMI 1.00571.09911.11821.16591.22551.03921.00520.97160.93841.003
AQI 1.04291.01151.00190.96930.9640.92980.96480.98160.95610.9324
SGI 0.98771.05551.08931.08891.08760.9570.92820.93580.93831.028
DEPI 0.9981.26711.39991.62081.79091.10341.07950.96610.87781.1107
SGAI 0.97140.8290.80020.75720.74631.07041.13041.22821.27531.1346
LVGI 1.02511.02011.01911.01780.99291.00760.99560.98720.97451.0086
TATA -0.03950.00380.01420.02250.0185-0.0356-0.049-0.0531-0.0558-0.0615
M-score -2.61-2.31-2.75-2.15-2.18-2.72-3.08-3.53-3.58-3.43
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