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Honda Motor Co Ltd (NYSE:HMC)
Beneish M-Score
-2.62 (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 -2.64 suggests that the company is not a manipulator.

HMC' s 10-Year Beneish M-Score Range
Min: -3.03   Max: -2.3
Current: -2.62

-3.03
-2.3

During the past 13 years, the highest Beneish M-Score of Honda Motor Co Ltd was -2.30. The lowest was -3.03. And the median was -2.57.


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 * 1.0262+0.528 * 0.9718+0.404 * 1.0019+0.892 * 1.0514+0.115 * 0.9762
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.004+4.679 * -0.0434-0.327 * 1.0191
=-2.64

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

This Year (Jun14) TTM:Last Year (Jun13) TTM:
Accounts Receivable was $24,840 Mil.
Revenue was 29371.7220366 + 30229.4208359 + 29113.915633 + 29561.4298865 = $118,276 Mil.
Gross Profit was 7371.89895813 + 8005.5242148 + 7826.09072773 + 7562.73908152 = $30,766 Mil.
Total Current Assets was $54,653 Mil.
Total Assets was $152,229 Mil.
Property, Plant and Equipment(Net PPE) was $50,304 Mil.
Depreciation, Depletion and Amortization(DDA) was $8,066 Mil.
Selling, General & Admin. Expense(SGA) was $16,985 Mil.
Total Current Liabilities was $45,133 Mil.
Long-Term Debt was $31,501 Mil.
Net Income was 1440.06290545 + 1664.17458861 + 1549.05985871 + 1231.13429477 = $5,884 Mil.
Non Operating Income was 0.304698250442 + 58.2580179195 + -132.352232534 + -91.5822849545 = $-165 Mil.
Cash Flow from Operations was 3486.05268331 + 3500.88816881 + 1917.82076117 + 3756.89884423 = $12,662 Mil.
Accounts Receivable was $23,022 Mil.
Revenue was 28433.9289477 + 28079.1341885 + 27238.3390599 + 28745.725387 = $112,497 Mil.
Gross Profit was 7120.14286718 + 7103.29589394 + 7020.53717802 + 7194.39839014 = $28,438 Mil.
Total Current Assets was $53,154 Mil.
Total Assets was $142,449 Mil.
Property, Plant and Equipment(Net PPE) was $45,141 Mil.
Depreciation, Depletion and Amortization(DDA) was $7,040 Mil.
Selling, General & Admin. Expense(SGA) was $16,091 Mil.
Total Current Liabilities was $41,116 Mil.
Long-Term Debt was $29,251 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)
=(24840.4462355 / 118276.488392) / (23022.4835211 / 112497.127583)
=0.21002015 / 0.20464952
=1.0262

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)
=(8005.5242148 / 112497.127583) / (7371.89895813 / 118276.488392)
=0.252792 / 0.26012146
=0.9718

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 - (54652.8798899 + 50303.5187733) / 152229.418125) / (1 - (53154.404904 + 45140.7101221) / 142448.968126)
=0.310538 / 0.3099626
=1.0019

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
=118276.488392 / 112497.127583
=1.0514

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))
=(7039.73373836 / (7039.73373836 + 45140.7101221)) / (8066.41858571 / (8066.41858571 + 50303.5187733))
=0.13491134 / 0.13819474
=0.9762

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)
=(16985.1119656 / 118276.488392) / (16091.4654095 / 112497.127583)
=0.14360514 / 0.1430389
=1.004

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)
=((31501.4940043 + 45133.1334775) / 152229.418125) / ((29250.5793946 + 41116.4909253) / 142448.968126)
=0.50341536 / 0.49398091
=1.0191

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
=(5884.43164754 - -165.371801319 - 12661.6604575) / 152229.418125
=-0.0434

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 -2.64 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

Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14
DSRI 1.06650.98690.93210.85740.86810.95241.04481.11921.08981.0262
GMI 1.06931.01741.00850.98080.99451.02561.01491.00560.98660.9718
AQI 0.98670.94940.97370.94930.97661.01351.02961.04291.02851.0019
SGI 0.94741.08851.16321.18711.13691.01990.99010.98921.0211.0514
DEPI 1.05831.03831.0340.9981.04491.03951.04491.04790.99120.9762
SGAI 1.03790.94110.89250.86880.89790.93330.95540.97140.99241.004
LVGI 1.01721.02121.02631.04651.01091.0261.03141.02511.01991.0191
TATA -0.0484-0.039-0.022-0.032-0.0295-0.0348-0.0447-0.0393-0.0408-0.0434
M-score -2.67-2.60-2.49-2.62-2.61-2.64-2.63-2.54-2.57-2.64
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