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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 -2.57 suggests that the company is not a manipulator.
During the past 13 years, the highest Beneish M-Score of Honda Motor Co Ltd was -2.31. The lowest was -2.98. And the median was -2.60.
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 * 1.0898||+||0.528 * 0.9866||+||0.404 * 1.0285||+||0.892 * 1.021||+||0.115 * 0.9912|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9924||+||4.679 * -0.0408||-||0.327 * 1.0199|
|This Year (Mar14) TTM:||Last Year (Mar13) TTM:|
|Accounts Receivable was $25,600 Mil.|
Revenue was 30229.4208359 + 29113.915633 + 29561.4298865 + 28433.9289477 = $117,339 Mil.
Gross Profit was 8005.5242148 + 7826.09072773 + 7562.73908152 + 7120.14286718 = $30,514 Mil.
Total Current Assets was $56,328 Mil.
Total Assets was $152,473 Mil.
Property, Plant and Equipment(Net PPE) was $49,339 Mil.
Depreciation, Depletion and Amortization(DDA) was $7,873 Mil.
Selling, General & Admin. Expense(SGA) was $16,810 Mil.
Total Current Liabilities was $45,983 Mil.
Long-Term Debt was $31,565 Mil.
Net Income was 1664.17458861 + 1549.05985871 + 1231.13429477 + 1229.00885897 = $5,673 Mil.
Non Operating Income was 58.2580179195 + -132.352232534 + -91.5822849545 + -159.983144884 = $-326 Mil.
Cash Flow from Operations was 3500.88816881 + 1917.82076117 + 3756.89884423 + 3051.87964644 = $12,227 Mil.
|Accounts Receivable was $23,006 Mil.
Revenue was 28079.1341885 + 27238.3390599 + 28745.725387 + 30859.6820168 = $114,923 Mil.
Gross Profit was 7103.29589394 + 7020.53717802 + 7194.39839014 + 8167.41622854 = $29,486 Mil.
Total Current Assets was $54,451 Mil.
Total Assets was $139,481 Mil.
Property, Plant and Equipment(Net PPE) was $43,400 Mil.
Depreciation, Depletion and Amortization(DDA) was $6,855 Mil.
Selling, General & Admin. Expense(SGA) was $16,590 Mil.
Total Current Liabilities was $41,828 Mil.
Long-Term Debt was $27,730 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)|
|=||(25599.6213082 / 117338.695303)||/||(23005.6159087 / 114922.880652)|
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)|
|=||(7826.09072773 / 114922.880652)||/||(8005.5242148 / 117338.695303)|
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 - (56328.1149349 + 49338.7827207) / 152472.535088)||/||(1 - (54451.3287915 + 43399.6399272) / 139480.72792)|
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))|
|=||(6854.69630299 / (6854.69630299 + 43399.6399272))||/||(7873.42106875 / (7873.42106875 + 49338.7827207))|
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)|
|=||(16809.8106804 / 117338.695303)||/||(16589.6196954 / 114922.880652)|
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)|
|=||((31564.7972828 + 45983.0271916) / 152472.535088)||/||((27730.1601915 + 41827.8197181) / 139480.72792)|
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|
|=||(5673.37760107 - -325.659644453||-||12227.4874207)||/||152472.535088|
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 -2.57 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