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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.
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.
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|
|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
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)|
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)|
|=||(7348.57622113 / 116194.164342)||/||(6924.59067058 / 116805.516027)|
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 - (54642.0083835 + 51697.4429769) / 153339.079941)||/||(1 - (53665.7897389 + 46331.2065316) / 146237.213991)|
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))|
|=||(7426.13120934 / (7426.13120934 + 46331.2065316))||/||(8136.28743395 / (8136.28743395 + 51697.4429769))|
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)|
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)|
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|
|=||(5976.06128586 - 50.1821912038||-||11721.045168)||/||153339.079941|
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.
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