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Honda Motor Co Ltd (NYSE:HMC)
Beneish M-Score
-3.49 (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 -3.58 suggests that the company is not a manipulator.

HMC' s Beneish M-Score Range Over the Past 10 Years
Min: -3.49   Max: -0.4
Current: -3.49

-3.49
-0.4

During the past 13 years, the highest Beneish M-Score of Honda Motor Co Ltd was -0.40. The lowest was -3.49. And the median was -2.55.


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 * 0.262+0.528 * 0.9384+0.404 * 0.9561+0.892 * 0.9383+0.115 * 0.8778
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.2753+4.679 * -0.0558-0.327 * 0.9745
=-3.58

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

This Year (Dec15) TTM:Last Year (Dec14) TTM:
Accounts Receivable was $5,753 Mil.
Revenue was 29738.3401159 + 30140.2358432 + 29945.0688902 + 29000.618799 = $118,824 Mil.
Gross Profit was 6804.10243762 + 6596.65278374 + 6620.7991361 + 6536.34509882 = $26,558 Mil.
Total Current Assets was $51,378 Mil.
Total Assets was $152,820 Mil.
Property, Plant and Equipment(Net PPE) was $56,954 Mil.
Depreciation, Depletion and Amortization(DDA) was $5,463 Mil.
Selling, General & Admin. Expense(SGA) was $16,035 Mil.
Total Current Liabilities was $43,117 Mil.
Long-Term Debt was $32,140 Mil.
Net Income was 1020.98080322 + 1063.28382756 + 1503.71084057 + 680.305163442 = $4,268 Mil.
Non Operating Income was 287.737904386 + 367.0651765 + 323.912491735 + 146.875480192 = $1,126 Mil.
Cash Flow from Operations was 2081.15262877 + 2410.51839571 + 3361.62872842 + 3812.84028755 = $11,666 Mil.
Accounts Receivable was $23,398 Mil.
Revenue was 29314.5261655 + 29154.4295266 + 31419.2816391 + 36748.9349228 = $126,637 Mil.
Gross Profit was 6820.00078778 + 6436.62550023 + 6908.78859997 + 6394.33261677 = $26,560 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 $4,225 Mil.
Selling, General & Admin. Expense(SGA) was $13,400 Mil.
Total Current Liabilities was $43,374 Mil.
Long-Term Debt was $32,114 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)
=(5752.6780943 / 118824.263648) / (23397.6348291 / 126637.172254)
=0.04841333 / 0.18476119
=0.262

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)
=(6596.65278374 / 126637.172254) / (6804.10243762 / 118824.263648)
=0.20973105 / 0.22350569
=0.9384

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 - (51377.7202286 + 56953.7961935) / 152819.870925) / (1 - (53127.1511934 + 50771.3497699) / 149382.677147)
=0.29111629 / 0.30448093
=0.9561

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
=118824.263648 / 126637.172254
=0.9383

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))
=(4225.32392709 / (4225.32392709 + 50771.3497699)) / (5463.14382466 / (5463.14382466 + 56953.7961935))
=0.07682872 / 0.08752662
=0.8778

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)
=(16034.5461404 / 118824.263648) / (13399.8077368 / 126637.172254)
=0.13494337 / 0.10581259
=1.2753

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)
=((32140.3378962 + 43117.1044518) / 152819.870925) / ((32114.2978781 + 43374.0518407) / 149382.677147)
=0.49245849 / 0.50533537
=0.9745

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
=(4268.28063479 - 1125.59105281 - 11666.1400404) / 152819.870925
=-0.0558

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 -3.58 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 1.06290.97920.89411.00241.20690.85591.15930.99672.09791.0253
GMI 1.03251.00631.00831.11341.02610.9241.06980.99531.09991.0367
AQI 0.99790.92250.91850.94190.97810.99480.98671.05841.01150.9298
SGI 1.02741.11941.25620.86130.92441.15740.88051.08151.17240.9059
DEPI 0.98790.94690.93570.91011.00061.07171.05281.18181.16461.1523
SGAI 0.95560.98090.97471.14910.84870.99251.03870.89940.82611.0811
LVGI 0.8871.01821.00371.01080.94420.98391.01720.98771.02011.0076
TATA -0.0143-0.0272-0.044-0.0169-0.1068-0.0503-0.0469-0.02570.0048-0.0346
M-score -2.41-2.56-2.59-2.68-2.81-2.73-2.63-2.47-1.19-2.71

Honda Motor Co Ltd Quarterly Data

Sep13Dec13Mar14Jun14Sep14Dec14Mar15Jun15Sep15Dec15
DSRI 1.57051.65962.33030.39970.95820.8860.97050.69190.26240.262
GMI 1.00660.99711.09911.11821.16591.22551.03921.00520.97160.9384
AQI 1.02961.04291.01151.00190.96930.9640.92980.96480.98160.9561
SGI 0.64190.62951.05551.08931.08891.08760.9570.92820.93580.9383
DEPI 1.50281.49771.26711.39991.62081.79091.10341.07950.96610.8778
SGAI 0.92370.93020.8290.80020.75720.74631.07041.13041.22821.2753
LVGI 1.03141.02511.02011.01911.01780.99291.00760.99560.98720.9745
TATA -0.0461-0.03950.00380.01420.02250.0185-0.0356-0.049-0.0531-0.0558
M-score -2.41-2.31-1.08-2.75-2.15-2.18-2.72-3.08-3.53-3.58
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