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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 -1.42. The lowest was -3.43. And the median was -2.62.
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 * 0.2925||+||0.528 * 1.0115||+||0.404 * 0.9324||+||0.892 * 1.032||+||0.115 * 1.1422|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.1213||+||4.679 * -0.0615||-||0.327 * 1.0086|
* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.
|This Year (Mar16) TTM:||Last Year (Mar15) TTM:|
|Accounts Receivable was $7,320 Mil.|
Revenue was 32390.2766008 + 29738.3401159 + 30140.2358432 + 29945.0688902 = $122,214 Mil.
Gross Profit was 7344.67824358 + 6804.10243762 + 6596.65278374 + 6620.7991361 = $27,366 Mil.
Total Current Assets was $55,269 Mil.
Total Assets was $161,419 Mil.
Property, Plant and Equipment(Net PPE) was $60,370 Mil.
Depreciation, Depletion and Amortization(DDA) was $5,532 Mil.
Selling, General & Admin. Expense(SGA) was $17,769 Mil.
Total Current Liabilities was $48,439 Mil.
Long-Term Debt was $33,088 Mil.
Net Income was -827.438177235 + 1020.98080322 + 1063.28382756 + 1503.71084057 = $2,761 Mil.
Non Operating Income was 22.8191021653 + 287.737904386 + 367.0651765 + 323.912491735 = $1,002 Mil.
Cash Flow from Operations was 3828.33163762 + 2081.15262877 + 2410.51839571 + 3361.62872842 = $11,682 Mil.
|Accounts Receivable was $24,251 Mil.
Revenue was 33515.4845113 + 27571.848918 + 28063.8245783 + 29278.7976826 = $118,430 Mil.
Gross Profit was 5473.31481089 + 7077.09223597 + 6924.59067058 + 7348.57622113 = $26,824 Mil.
Total Current Assets was $52,296 Mil.
Total Assets was $153,046 Mil.
Property, Plant and Equipment(Net PPE) was $54,196 Mil.
Depreciation, Depletion and Amortization(DDA) was $5,747 Mil.
Selling, General & Admin. Expense(SGA) was $15,356 Mil.
Total Current Liabilities was $44,031 Mil.
Long-Term Debt was $32,612 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)|
|=||(7320.47777551 / 122213.92145)||/||(24250.5430065 / 118429.95569)|
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)|
|=||(26823.5739386 / 118429.95569)||/||(27366.232601 / 122213.92145)|
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 - (55269.0342924 + 60369.8961408) / 161418.751334)||/||(1 - (52295.9105275 + 54195.8145929) / 153045.50457)|
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))|
|=||(5747.30493241 / (5747.30493241 + 54195.8145929))||/||(5532.18104845 / (5532.18104845 + 60369.8961408))|
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)|
|=||(17768.666665 / 122213.92145)||/||(15356.3901292 / 118429.95569)|
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)|
|=||((33087.5033317 + 48439.4638529) / 161418.751334)||/||((32611.7555204 + 44030.6990768) / 153045.50457)|
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|
|=||(2760.53729412 - 1001.53467479||-||11681.6313905)||/||161418.751334|
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 -3.42 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