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Beneish M-Score -1.18 higher than -2.22, which implies that it might have manipulated its financial results.
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 -1.31 signals that the company is a manipulator.
During the past 13 years, the highest Beneish M-Score of Honda Motor Co Ltd was -1.18. The lowest was -3.42. And the median was -2.60.
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 * 2.4641||+||0.528 * 0.9853||+||0.404 * 0.9693||+||0.892 * 1.0292||+||0.115 * 0.9942|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9939||+||4.679 * -0.038||-||0.327 * 1.0178|
|This Year (Sep14) TTM:||Last Year (Sep13) TTM:|
|Accounts Receivable was $24,415 Mil.|
Revenue was 27907.7706931 + 29371.7220366 + 30229.4208359 + 29113.915633 = $116,623 Mil.
Gross Profit was 6886.08525323 + 7371.89895813 + 8005.5242148 + 7826.09072773 = $30,090 Mil.
Total Current Assets was $54,338 Mil.
Total Assets was $152,486 Mil.
Property, Plant and Equipment(Net PPE) was $51,410 Mil.
Depreciation, Depletion and Amortization(DDA) was $8,124 Mil.
Selling, General & Admin. Expense(SGA) was $16,583 Mil.
Total Current Liabilities was $45,952 Mil.
Long-Term Debt was $31,456 Mil.
Net Income was 1313.54928055 + 1440.06290545 + 1664.17458861 + 1549.05985871 = $5,967 Mil.
Non Operating Income was 123.599416439 + 0.304698250442 + 58.2580179195 + -132.352232534 = $50 Mil.
Cash Flow from Operations was 2802.02802278 + 3486.05268331 + 3500.88816881 + 1917.82076117 = $11,707 Mil.
|Accounts Receivable was $9,627 Mil.
Revenue was 29561.4298865 + 28433.9289477 + 28079.1341885 + 27238.3390599 = $113,313 Mil.
Gross Profit was 7562.73908152 + 7120.14286718 + 7103.29589394 + 7020.53717802 = $28,807 Mil.
Total Current Assets was $54,456 Mil.
Total Assets was $148,391 Mil.
Property, Plant and Equipment(Net PPE) was $47,014 Mil.
Depreciation, Depletion and Amortization(DDA) was $7,379 Mil.
Selling, General & Admin. Expense(SGA) was $16,211 Mil.
Total Current Liabilities was $43,121 Mil.
Long-Term Debt was $30,893 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)|
|=||(24415.0226241 / 116622.829199)||/||(9626.97146364 / 113312.832083)|
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)|
|=||(7371.89895813 / 113312.832083)||/||(6886.08525323 / 116622.829199)|
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 - (54338.1617827 + 51409.9701554) / 152486.410729)||/||(1 - (54456.2033344 + 47013.5931267) / 148391.060653)|
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))|
|=||(7378.87024816 / (7378.87024816 + 47013.5931267))||/||(8123.54159116 / (8123.54159116 + 51409.9701554))|
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)|
|=||(16582.9202519 / 116622.829199)||/||(16210.6429812 / 113312.832083)|
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)|
|=||((31455.6812039 + 45952.0357987) / 152486.410729)||/||((30893.4540248 + 43120.5277693) / 148391.060653)|
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|
|=||(5966.84663332 - 49.8099000745||-||11706.7896361)||/||152486.410729|
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 -1.31 signals that the company is likely to 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