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Honda Motor Co Ltd (NYSE:HMC)
Beneish M-Score
-2.53 (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 -2.57 suggests that the company is not a manipulator.

HMC' s 10-Year Beneish M-Score Range
Min: -2.98   Max: -2.31
Current: -2.53

-2.98
-2.31

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.


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 * 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
=-2.57

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

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

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)
=(25599.6213082 / 117338.695303) / (23005.6159087 / 114922.880652)
=0.21816862 / 0.20018308
=1.0898

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)
=(7826.09072773 / 114922.880652) / (8005.5242148 / 117338.695303)
=0.25656899 / 0.26005485
=0.9866

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 - (56328.1149349 + 49338.7827207) / 152472.535088) / (1 - (54451.3287915 + 43399.6399272) / 139480.72792)
=0.3069775 / 0.29846245
=1.0285

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
=117338.695303 / 114922.880652
=1.021

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))
=0.1364001 / 0.13761786
=0.9912

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)
=0.14325889 / 0.14435437
=0.9924

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)
=0.50860192 / 0.49869241
=1.0199

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
=(5673.37760107 - -325.659644453 - 12227.4874207) / 152472.535088
=-0.0408

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.


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

Mar05Mar06Mar07Mar08Mar09Mar10Mar11Mar12Mar13Mar14
DSRI 1.04411.0571.01070.87931.02831.14240.92861.10980.95550.9728
GMI 1.03571.03251.00631.00831.11341.02610.9241.06980.99530.9854
AQI 1.02750.99790.92250.91850.94190.97810.99480.98670.97661.0285
SGI 1.06581.04821.10171.25030.86830.90711.17040.91041.0331.1439
DEPI 1.03770.98790.94690.93570.91011.00061.03161.09361.13510.8993
SGAI 0.94970.95560.98090.97471.14910.84870.99251.03870.89940.9914
LVGI 1.00330.8871.01821.00371.01080.94420.98391.01721.01091.0199
TATA -0.045-0.0143-0.0272-0.044-0.0169-0.1068-0.0526-0.0469-0.0267-0.0398
M-score -2.55-2.39-2.54-2.61-2.65-2.88-2.67-2.65-2.60-2.58

Honda Motor Co Ltd Quarterly Data

Dec11Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14
DSRI 1.03341.06650.98690.93210.85740.86810.95241.04481.11921.0898
GMI 1.07851.06931.01741.00850.98080.99451.02561.01491.00560.9866
AQI 1.01860.98670.94940.97370.94930.97661.01351.02961.04291.0285
SGI 0.93890.94741.08851.16321.18711.13691.01990.99010.98921.021
DEPI 1.03861.05831.03831.0340.9981.04491.03951.04491.04790.9912
SGAI 1.13031.03790.94110.89250.86880.89790.93330.95540.97140.9924
LVGI 0.98531.01721.02121.02631.04651.01091.0261.03141.02511.0199
TATA -0.0625-0.0484-0.039-0.022-0.032-0.0295-0.0348-0.0447-0.0393-0.0408
M-score -2.76-2.67-2.60-2.49-2.62-2.61-2.64-2.63-2.54-2.57
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