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Honda Motor Co Ltd (NYSE:HMC)
Beneish M-Score
-2.78 (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 -2.60 suggests that the company is not a manipulator.

HMC' s Beneish M-Score Range Over the Past 10 Years
Min: -3.49   Max: -1.09
Current: -2.78

-3.49
-1.09

During the past 13 years, the highest Beneish M-Score of Honda Motor Co Ltd was -1.09. The lowest was -3.49. And the median was -2.52.


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 * 1.0499+0.528 * 0.9854+0.404 * 0.9379+0.892 * 1.0738+0.115 * 1.0271
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0332+4.679 * -0.0417-0.327 * 0.9894
=-2.60

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

This Year (Sep16) TTM:Last Year (Sep15) TTM:
Accounts Receivable was $6,796 Mil.
Revenue was 32057.6749066 + 32953.9662215 + 32390.2766008 + 29738.3401159 = $127,140 Mil.
Gross Profit was 7271.22945287 + 7537.38221505 + 7344.67824358 + 6804.10243762 = $28,957 Mil.
Total Current Assets was $55,687 Mil.
Total Assets was $166,906 Mil.
Property, Plant and Equipment(Net PPE) was $64,120 Mil.
Depreciation, Depletion and Amortization(DDA) was $6,025 Mil.
Selling, General & Admin. Expense(SGA) was $17,481 Mil.
Total Current Liabilities was $48,448 Mil.
Long-Term Debt was $34,307 Mil.
Net Income was 1739.91470197 + 1658.25825883 + -827.438177235 + 1020.98080322 = $3,592 Mil.
Non Operating Income was 375.460655523 + 164.222612242 + 22.8191021653 + 287.737904386 = $850 Mil.
Cash Flow from Operations was 2168.89048704 + 1626.81097171 + 3828.33163762 + 2081.15262877 = $9,705 Mil.
Accounts Receivable was $6,028 Mil.
Revenue was 30140.2358432 + 29945.0688902 + 29000.618799 + 29314.5261655 = $118,400 Mil.
Gross Profit was 6596.65278374 + 6620.7991361 + 6536.34509882 + 6820.00078778 = $26,574 Mil.
Total Current Assets was $50,454 Mil.
Total Assets was $152,498 Mil.
Property, Plant and Equipment(Net PPE) was $56,160 Mil.
Depreciation, Depletion and Amortization(DDA) was $5,433 Mil.
Selling, General & Admin. Expense(SGA) was $15,756 Mil.
Total Current Liabilities was $42,016 Mil.
Long-Term Debt was $34,408 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)
=(6796.15618519 / 127140.257845) / (6027.93563916 / 118400.449698)
=0.05345401 / 0.05091143
=1.0499

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)
=(26573.7978064 / 118400.449698) / (28957.3923491 / 127140.257845)
=0.22444001 / 0.22775943
=0.9854

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 - (55686.7611213 + 64119.7512779) / 166906.349997) / (1 - (50454.3494835 + 56159.631986) / 152498.002457)
=0.2821932 / 0.30088277
=0.9379

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
=127140.257845 / 118400.449698
=1.0738

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))
=(5433.43472102 / (5433.43472102 + 56159.631986)) / (6024.55120001 / (6024.55120001 + 64119.7512779))
=0.08821504 / 0.08588796
=1.0271

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)
=(17481.1629385 / 127140.257845) / (15755.855964 / 118400.449698)
=0.1374951 / 0.1330726
=1.0332

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)
=((34306.5679088 + 48448.297036) / 166906.349997) / ((34407.8699866 + 42015.7289867) / 152498.002457)
=0.49581616 / 0.50114492
=0.9894

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
=(3591.71558679 - 850.240274316 - 9705.18572514) / 166906.349997
=-0.0417

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 -2.60 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 local exchange's currency.

Honda Motor Co Ltd Annual Data

Mar07Mar08Mar09Mar10Mar11Mar12Mar13Mar14Mar15Mar16
DSRI 0.97920.89411.00242.70980.92860.47592.33840.89421.02530.2585
GMI 1.00631.00831.11341.02610.9241.06980.99531.09991.03671.0045
AQI 0.92250.91850.94190.97810.99480.98671.05841.01150.92980.9324
SGI 1.11941.25620.86130.92441.15740.88051.08151.17240.90591.1679
DEPI 0.94690.93570.91011.00061.03161.09361.18181.16461.15230.9897
SGAI 0.98090.97471.14910.84870.99251.03870.89940.82611.08111.1188
LVGI 1.01821.00371.01080.94420.98391.01720.98771.02011.00761.0086
TATA -0.0186-0.0346-0.0169-0.1068-0.0526-0.0469-0.02570.0048-0.0346-0.0641
M-score -2.52-2.54-2.68-1.42-2.68-3.26-1.23-2.30-2.71-3.36

Honda Motor Co Ltd Quarterly Data

Jun14Sep14Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16
DSRI 0.39970.95820.8860.97050.69190.26240.2620.29370.92781.0499
GMI 1.11821.16591.22551.03921.00520.97160.93841.0030.9960.9854
AQI 1.00190.96930.9640.92980.96480.98160.95610.93240.94280.9379
SGI 1.08931.08891.08760.9570.92820.93580.93831.0281.06651.0738
DEPI 1.39991.62081.79091.10341.07950.96610.87781.11071.04551.0271
SGAI 0.80020.75720.74631.07041.13041.22821.27531.13461.09151.0332
LVGI 1.01911.01780.99291.00760.99560.98720.97451.00860.99430.9894
TATA 0.01420.02250.0185-0.0356-0.049-0.0531-0.0558-0.0615-0.0485-0.0417
M-score -2.75-2.15-2.18-2.72-3.08-3.53-3.58-3.43-2.75-2.60
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