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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.
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.
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|
* 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
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)|
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)|
|=||(6924.59067058 / 116442.274355)||/||(7077.09223597 / 115178.747122)|
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 - (53127.1511934 + 50771.3497699) / 149382.677147)||/||(1 - (55201.1308718 + 47603.3152909) / 150269.853083)|
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))|
|=||(7594.76397654 / (7594.76397654 + 47603.3152909))||/||(8237.68863875 / (8237.68863875 + 50771.3497699))|
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)|
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)|
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|
|=||(5566.57970951 - 308.259628292||-||11983.563245)||/||149382.677147|
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.
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