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Honda Motor Co Ltd (NYSE:HMC)
Beneish M-Score
-2.75 (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 -2.75 suggests that the company is not a manipulator.

HMC' s Beneish M-Score Range Over the Past 10 Years
Min: -3.58   Max: -1.34
Current: -2.75

-3.58
-1.34

During the past 13 years, the highest Beneish M-Score of Honda Motor Co Ltd was -1.34. The lowest was -3.58. And the median was -2.55.


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 * 0.9278+0.528 * 0.996+0.404 * 0.9428+0.892 * 1.0665+0.115 * 1.0455
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0915+4.679 * -0.0485-0.327 * 0.9943
=-2.75

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

This Year (Jun16) TTM:Last Year (Jun15) TTM:
Accounts Receivable was $6,530 Mil.
Revenue was 32953.9662215 + 32390.2766008 + 29738.3401159 + 30140.2358432 = $125,223 Mil.
Gross Profit was 7537.38221505 + 7344.67824358 + 6804.10243762 + 6596.65278374 = $28,283 Mil.
Total Current Assets was $54,587 Mil.
Total Assets was $162,340 Mil.
Property, Plant and Equipment(Net PPE) was $61,894 Mil.
Depreciation, Depletion and Amortization(DDA) was $5,817 Mil.
Selling, General & Admin. Expense(SGA) was $17,690 Mil.
Total Current Liabilities was $49,092 Mil.
Long-Term Debt was $31,805 Mil.
Net Income was 1658.25825883 + -827.438177235 + 1020.98080322 + 1063.28382756 = $2,915 Mil.
Non Operating Income was 164.222612242 + 22.8191021653 + 287.737904386 + 367.0651765 = $842 Mil.
Cash Flow from Operations was 1626.81097171 + 3828.33163762 + 2081.15262877 + 2410.51839571 = $9,947 Mil.
Accounts Receivable was $6,599 Mil.
Revenue was 29945.0688902 + 29000.618799 + 29314.5261655 + 29154.4295266 = $117,415 Mil.
Gross Profit was 6620.7991361 + 6536.34509882 + 6820.00078778 + 6436.62550023 = $26,414 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 $5,432 Mil.
Selling, General & Admin. Expense(SGA) was $15,196 Mil.
Total Current Liabilities was $45,400 Mil.
Long-Term Debt was $31,159 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)
=(6529.92048478 / 125222.818781) / (6599.13707397 / 117414.643381)
=0.05214641 / 0.0562037
=0.9278

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)
=(26413.7705229 / 117414.643381) / (28282.81568 / 125222.818781)
=0.22496147 / 0.22585992
=0.996

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 - (54587.345718 + 61894.2695316) / 162339.961025) / (1 - (51941.7937157 + 55045.692402) / 152753.93514)
=0.28248341 / 0.29960897
=0.9428

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
=125222.818781 / 117414.643381
=1.0665

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))
=(5431.58145428 / (5431.58145428 + 55045.692402)) / (5816.65858395 / (5816.65858395 + 61894.2695316))
=0.08981194 / 0.08590428
=1.0455

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)
=(17689.6983974 / 125222.818781) / (15195.7320262 / 117414.643381)
=0.14126577 / 0.12941939
=1.0915

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)
=((31805.081874 + 49092.4045262) / 162339.961025) / ((31158.863744 + 45400.085355) / 152753.93514)
=0.49832146 / 0.50119134
=0.9943

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
=(2915.08471238 - 841.844795293 - 9946.81363381) / 162339.961025
=-0.0485

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 -2.75 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

Mar07Mar08Mar09Mar10Mar11Mar12Mar13Mar14Mar15Mar16
DSRI 0.97920.89411.00241.20690.85591.15932.33840.89421.02530.2585
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 -2.52-2.54-2.68-2.81-2.75-2.63-1.23-2.30-2.71-3.36

Honda Motor Co Ltd Quarterly Data

Mar14Jun14Sep14Dec14Mar15Jun15Sep15Dec15Mar16Jun16
DSRI 0.99320.39970.95820.8860.97050.69190.26240.2620.29370.9278
GMI 1.09911.11821.16591.22551.03921.00520.97160.93841.0030.996
AQI 1.01151.00190.96930.9640.92980.96480.98160.95610.93240.9428
SGI 1.05551.08931.08891.08760.9570.92820.93580.93831.0281.0665
DEPI 1.26711.39991.62081.79091.10341.07950.96610.87781.11071.0455
SGAI 0.8290.80020.75720.74631.07041.13041.22821.27531.13461.0915
LVGI 1.02011.01911.01780.99291.00760.99560.98720.97451.00860.9943
TATA 0.00380.01420.02250.0185-0.0356-0.049-0.0531-0.0558-0.0615-0.0485
M-score -2.31-2.75-2.15-2.18-2.72-3.08-3.53-3.58-3.43-2.75
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