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Honda Motor Co Ltd (NYSE:HMC)
Beneish M-Score
-2.56 (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: -3.44   Max: -1.5
Current: -2.56

-3.44
-1.5

During the past 13 years, the highest Beneish M-Score of Honda Motor Co Ltd was -1.50. The lowest was -3.44. 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 * 1.0362+0.528 * 0.9854+0.404 * 0.9693+0.892 * 1.0053+0.115 * 1.0159
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9938+4.679 * -0.0378-0.327 * 1.0178
=-2.64

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

This Year (Sep14) TTM:Last Year (Sep13) TTM:
Accounts Receivable was $9,882 Mil.
Revenue was 28063.8245783 + 29278.7976826 + 30264.2759429 + 29198.6178233 = $116,806 Mil.
Gross Profit was 6924.59067058 + 7348.57622113 + 8014.7547391 + 7848.85946259 = $30,137 Mil.
Total Current Assets was $54,642 Mil.
Total Assets was $153,339 Mil.
Property, Plant and Equipment(Net PPE) was $51,697 Mil.
Depreciation, Depletion and Amortization(DDA) was $8,136 Mil.
Selling, General & Admin. Expense(SGA) was $16,609 Mil.
Total Current Liabilities was $46,209 Mil.
Long-Term Debt was $31,632 Mil.
Net Income was 1320.89434837 + 1435.50692759 + 1666.09341411 + 1553.56659579 = $5,976 Mil.
Non Operating Income was 124.29055617 + 0.30373426583 + 58.3251905413 + -132.737289774 = $50 Mil.
Cash Flow from Operations was 2817.69632406 + 3475.02373536 + 3504.9247606 + 1923.40034796 = $11,721 Mil.
Accounts Receivable was $9,487 Mil.
Revenue was 29132.3556093 + 29146.8606983 + 28964.4402237 + 28950.5078111 = $116,194 Mil.
Gross Profit was 7452.96845076 + 7298.66817504 + 7327.25546059 + 7461.83957704 = $29,541 Mil.
Total Current Assets was $53,666 Mil.
Total Assets was $146,237 Mil.
Property, Plant and Equipment(Net PPE) was $46,331 Mil.
Depreciation, Depletion and Amortization(DDA) was $7,426 Mil.
Selling, General & Admin. Expense(SGA) was $16,625 Mil.
Total Current Liabilities was $42,495 Mil.
Long-Term Debt was $30,445 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)
=(9882.48622071 / 116805.516027) / (9487.2391896 / 116194.164342)
=0.08460633 / 0.08164988
=1.0362

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)
=(7348.57622113 / 116194.164342) / (6924.59067058 / 116805.516027)
=0.25423593 / 0.2580082
=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 - (54642.0083835 + 51697.4429769) / 153339.079941) / (1 - (53665.7897389 + 46331.2065316) / 146237.213991)
=0.30650783 / 0.31620007
=0.9693

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
=116805.516027 / 116194.164342
=1.0053

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))
=(7426.13120934 / (7426.13120934 + 46331.2065316)) / (8136.28743395 / (8136.28743395 + 51697.4429769))
=0.13814172 / 0.13598162
=1.0159

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)
=(16609.0440759 / 116805.516027) / (16625.4245799 / 116194.164342)
=0.142194 / 0.14308313
=0.9938

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)
=((31631.574195 + 46208.9890967) / 153339.079941) / ((30445.0458623 + 42494.647717) / 146237.213991)
=0.50763682 / 0.49877655
=1.0178

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
=(5976.06128586 - 50.1821912038 - 11721.045168) / 153339.079941
=-0.0378

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 1.99971.06290.97920.89411.00241.20690.85591.15930.99670.9607
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 1.09411.02741.11941.25620.86130.92441.15740.88051.08151.1102
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 -1.65-2.41-2.56-2.59-2.68-2.81-2.75-2.63-2.52-2.62

Honda Motor Co Ltd Quarterly Data

Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14
DSRI 0.99610.94811.01420.91590.38990.39851.06621.06621.03681.0362
GMI 1.01721.00850.98110.99471.02541.01471.00570.98660.97190.9854
AQI 0.94940.97370.94930.97661.01351.02961.04291.02851.00190.9693
SGI 1.08921.15881.20361.17681.06151.020.98771.00041.0151.0053
DEPI 1.0481.051.04991.05431.030.99620.9980.98370.98221.0159
SGAI 0.93970.89190.86840.89820.93360.95590.97140.99171.00380.9938
LVGI 1.02121.02631.04651.01091.0261.03141.02511.01991.01911.0178
TATA -0.0389-0.0217-0.0304-0.0294-0.035-0.0461-0.0395-0.0409-0.0433-0.0378
M-score -2.59-2.48-2.44-2.53-3.12-3.21-2.60-2.61-2.66-2.64
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