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Honda Motor Co Ltd (NYSE:HMC)
Beneish M-Score
-2.58 (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 -2.74 suggests that the company is not a manipulator.

HMC' s 10-Year Beneish M-Score Range
Min: -3.12   Max: -1.5
Current: -2.58

-3.12
-1.5

During the past 13 years, the highest Beneish M-Score of Honda Motor Co Ltd was -1.50. The lowest was -3.12. And the median was -2.58.


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 * 0.9741+0.528 * 1.0081+0.404 * 0.964+0.892 * 0.9891+0.115 * 0.9856
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0213+4.679 * -0.045-0.327 * 0.9929
=-2.74

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

This Year (Dec14) TTM:Last Year (Dec13) TTM:
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.
Net Income was 1144.08501944 + 1320.89434837 + 1435.50692759 + 1666.09341411 = $5,567 Mil.
Non Operating Income was 125.340147314 + 124.29055617 + 0.30373426583 + 58.3251905413 = $308 Mil.
Cash Flow from Operations was 2185.91842498 + 2817.69632406 + 3475.02373536 + 3504.9247606 = $11,984 Mil.
Accounts Receivable was $24,283 Mil.
Revenue was 29198.6178233 + 29132.3556093 + 29146.8606983 + 28964.4402237 = $116,442 Mil.
Gross Profit was 7848.85946259 + 7452.96845076 + 7298.66817504 + 7327.25546059 = $29,928 Mil.
Total Current Assets was $55,201 Mil.
Total Assets was $150,270 Mil.
Property, Plant and Equipment(Net PPE) was $47,603 Mil.
Depreciation, Depletion and Amortization(DDA) was $7,595 Mil.
Selling, General & Admin. Expense(SGA) was $16,509 Mil.
Total Current Liabilities was $43,351 Mil.
Long-Term Debt was $33,131 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)
=(23397.6348291 / 115178.747122) / (24282.6309685 / 116442.274355)
=0.20314195 / 0.20853793
=0.9741

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)
=(6924.59067058 / 116442.274355) / (7077.09223597 / 115178.747122)
=0.25701792 / 0.25495167
=1.0081

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 - (53127.1511934 + 50771.3497699) / 149382.677147) / (1 - (55201.1308718 + 47603.3152909) / 150269.853083)
=0.30448093 / 0.31586779
=0.964

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
=115178.747122 / 116442.274355
=0.9891

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))
=(7594.76397654 / (7594.76397654 + 47603.3152909)) / (8237.68863875 / (8237.68863875 + 50771.3497699))
=0.13759109 / 0.13960046
=0.9856

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)
=(16677.5231826 / 115178.747122) / (16508.5138416 / 116442.274355)
=0.14479688 / 0.14177423
=1.0213

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)
=((32114.2978781 + 43374.0518407) / 149382.677147) / ((33130.6785231 + 43350.5026097) / 150269.853083)
=0.50533537 / 0.50895891
=0.9929

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
=(5566.57970951 - 308.259628292 - 11983.563245) / 149382.677147
=-0.045

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 -2.74 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

Mar06Mar07Mar08Mar09Mar10Mar11Mar12Mar13Mar14Mar15
DSRI 1.06290.97920.89411.00241.20690.85591.15930.99670.96072.3088
GMI 1.03251.00631.00831.11341.02610.9241.06980.99530.98541.03
AQI 0.99790.92250.91850.94190.97810.99480.98670.97661.02850.9464
SGI 1.02741.11941.25620.86130.92441.15740.88051.08151.11020.9078
DEPI 0.98790.94690.93570.91011.00061.03161.09361.13510.89931.0474
SGAI 0.95560.98090.97471.14910.84870.99251.03870.89940.99141.0377
LVGI 0.8871.01821.00371.01080.94420.98391.01721.01091.01991.0032
TATA -0.0143-0.0272-0.044-0.0169-0.1068-0.0526-0.0469-0.0267-0.0398-0.0512
M-score -2.41-2.56-2.59-2.68-2.81-2.75-2.63-2.52-2.62-1.61

Honda Motor Co Ltd Quarterly Data

Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14Dec14Mar15
DSRI 0.90860.91590.94250.98841.05771.06620.42891.03790.97412.1882
GMI 0.98110.99471.02541.01471.00570.98660.97190.98541.00811.0302
AQI 0.94930.97661.01351.02961.04291.02851.00190.96930.9640.9464
SGI 1.20361.17681.06151.020.98771.00041.0151.00530.98910.9578
DEPI 1.04991.05431.030.99620.9980.98370.98221.01590.98561.0009
SGAI 0.86840.89820.93360.95590.97140.99171.00380.99381.02131.0331
LVGI 1.04651.01091.0261.03141.02511.01991.01911.01780.99291.0032
TATA -0.0304-0.0294-0.035-0.0461-0.0395-0.0409-0.0433-0.0378-0.045-0.0545
M-score -2.54-2.53-2.62-2.67-2.61-2.61-3.22-2.64-2.74-1.69
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