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Honda Motor Co Ltd (NYSE:HMC)
Beneish M-Score
-2.61 (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 -2.80 suggests that the company is not a manipulator.

HMC' s 10-Year Beneish M-Score Range
Min: -3.13   Max: -1.23
Current: -2.61

-3.13
-1.23

During the past 13 years, the highest Beneish M-Score of Honda Motor Co Ltd was -1.23. The lowest was -3.13. 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 * 0.6357+0.528 * 1.1873+0.404 * 0.9648+0.892 * 1.0104+0.115 * 1.6688
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.869+4.679 * -0.0389-0.327 * 0.9956
=-2.80

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

This Year (Jun15) TTM:Last Year (Jun14) TTM:
Accounts Receivable was $6,599 Mil.
Revenue was 29945.0688902 + 33515.4845113 + 27571.848918 + 28063.8245783 = $119,096 Mil.
Gross Profit was 6620.7991361 + 5473.31481089 + 7077.09223597 + 6924.59067058 = $26,096 Mil.
Total Current Assets was $51,942 Mil.
Total Assets was $152,754 Mil.
Property, Plant and Equipment(Net PPE) was $55,046 Mil.
Depreciation, Depletion and Amortization(DDA) was $4,969 Mil.
Selling, General & Admin. Expense(SGA) was $14,863 Mil.
Total Current Liabilities was $45,400 Mil.
Long-Term Debt was $31,159 Mil.
Net Income was 1503.71084057 + 701.93405845 + 1144.08501944 + 1320.89434837 = $4,671 Mil.
Non Operating Income was 323.912491735 + 817.744996657 + 125.340147314 + 124.29055617 = $1,391 Mil.
Cash Flow from Operations was 3361.62872842 + 848.950741105 + 2185.91842498 + 2817.69632406 = $9,214 Mil.
Accounts Receivable was $10,275 Mil.
Revenue was 29278.7976826 + 30264.2759429 + 29198.6178233 + 29132.3556093 = $117,874 Mil.
Gross Profit was 7348.57622113 + 8014.7547391 + 7848.85946259 + 7452.96845076 = $30,665 Mil.
Total Current Assets was $54,480 Mil.
Total Assets was $151,748 Mil.
Property, Plant and Equipment(Net PPE) was $50,144 Mil.
Depreciation, Depletion and Amortization(DDA) was $8,039 Mil.
Selling, General & Admin. Expense(SGA) was $16,928 Mil.
Total Current Liabilities was $44,990 Mil.
Long-Term Debt was $31,402 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)
=(6599.13707397 / 119096.226898) / (10274.9774894 / 117874.047058)
=0.05541013 / 0.08716912
=0.6357

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)
=(5473.31481089 / 117874.047058) / (6620.7991361 / 119096.226898)
=0.26015191 / 0.21911523
=1.1873

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 - (51941.7937157 + 55045.692402) / 152753.93514) / (1 - (54479.9726443 + 50144.3717551) / 151747.80454)
=0.29960897 / 0.310538
=0.9648

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
=119096.226898 / 117874.047058
=1.0104

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))
=(8039.28610257 / (8039.28610257 + 50144.3717551)) / (4969.02986392 / (4969.02986392 + 55045.692402))
=0.13817086 / 0.08279685
=1.6688

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)
=(14862.5302999 / 119096.226898) / (16927.7567194 / 117874.047058)
=0.1247943 / 0.14360885
=0.869

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)
=((31158.863744 + 45400.085355) / 152753.93514) / ((31401.8316156 + 44990.3441897) / 151747.80454)
=0.50119134 / 0.50341536
=0.9956

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
=(4670.62426683 - 1391.28819188 - 9214.19421857) / 152753.93514
=-0.0389

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 -2.80 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 1.06290.97920.89411.00241.20690.85591.15930.99672.17480.9891
GMI 1.03251.00631.00831.11341.02610.9241.06980.99530.98541.157
AQI 0.99790.92250.91850.94190.97810.99480.98540.97791.02850.9909
SGI 1.02741.11941.25620.86130.92441.15740.88051.08151.11020.9567
DEPI 0.98790.94690.93570.91011.00061.07171.0941.09240.89931.5536
SGAI 0.95560.98090.97471.14910.84870.99251.03870.89940.99140.9009
LVGI 0.8871.01821.00371.01080.94420.98391.01781.01151.01870.9846
TATA -0.0143-0.0272-0.044-0.0169-0.1068-0.0503-0.0449-0.0267-0.0398-0.0346
M-score -2.41-2.56-2.59-2.68-2.81-2.73-2.62-2.52-1.50-2.53

Honda Motor Co Ltd Quarterly Data

Mar13Jun13Sep13Dec13Mar14Jun14Sep14Dec14Mar15Jun15
DSRI 0.91590.94250.98841.05771.06620.42891.03790.97412.12950.6357
GMI 0.99471.02541.01471.00570.98660.97190.98541.00811.1481.1873
AQI 0.97791.01351.02961.04291.02851.00190.96930.9640.99090.9648
SGI 1.17681.06151.020.98771.00041.0151.00530.98911.00581.0104
DEPI 1.02110.97850.92640.91080.9790.98691.03141.00971.43811.6688
SGAI 0.89820.93360.95590.97140.99171.00380.99381.02130.90540.869
LVGI 1.01151.0261.03141.02511.01871.01911.01780.99290.98460.9956
TATA -0.0291-0.0353-0.047-0.041-0.0409-0.0433-0.0378-0.045-0.0379-0.0389
M-score -2.53-2.62-2.68-2.62-2.61-3.22-2.64-2.73-1.47-2.80
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