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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.
During the past 13 years, the highest Beneish M-Score of Homeinns Hotel Group was -1.03. The lowest was -9.80. And the median was -2.17.
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 Homeinns Hotel Group 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 *||+||0.528 *||+||0.404 *||+||0.892 *||+||0.115 *|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 *||+||4.679 *||-||0.327 *|
|This Year (Mar15) TTM:||Last Year (Mar14) TTM:|
|Accounts Receivable was $20 Mil.|
Revenue was 221.542653801 + 248.033480917 + 287.452673422 + 255.836356049 = $1,013 Mil.
Gross Profit was 11.8510563267 + 32.6674853763 + 64.7067544231 + 51.3568516676 = $161 Mil.
Total Current Assets was $194 Mil.
Total Assets was $1,464 Mil.
Property, Plant and Equipment(Net PPE) was $626 Mil.
Depreciation, Depletion and Amortization(DDA) was $124 Mil.
Selling, General & Admin. Expense(SGA) was $68 Mil.
Total Current Liabilities was $406 Mil.
Long-Term Debt was $52 Mil.
Net Income was -6.02234475684 + 13.6656109621 + 39.9973933726 + 17.360446827 = $65 Mil.
Non Operating Income was -2.21459942936 + 6.13418220599 + 9.15186862598 + -3.47799569865 = $10 Mil.
Cash Flow from Operations was 0 + 217.368710209 + 0 + 0 = $217 Mil.
|Accounts Receivable was $0 Mil.
Revenue was 223.261623198 + 248.797003622 + 266.831699346 + 244.97424193 = $984 Mil.
Gross Profit was 20.7255791349 + 38.4142245637 + 54.9866013072 + 44.4819041409 = $159 Mil.
Total Current Assets was $0 Mil.
Total Assets was $0 Mil.
Property, Plant and Equipment(Net PPE) was $0 Mil.
Depreciation, Depletion and Amortization(DDA) was $118 Mil.
Selling, General & Admin. Expense(SGA) was $70 Mil.
Total Current Liabilities was $0 Mil.
Long-Term Debt was $0 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)|
|=||(19.6874298721 / 1012.86516419)||/||(0 / 983.864568096)|
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)|
|=||(32.6674853763 / 983.864568096)||/||(11.8510563267 / 1012.86516419)|
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 - (193.753245921 + 625.63219312) / 1464.0436957)||/||(1 - (0 + 0) / 0)|
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))|
|=||(117.629568653 / (117.629568653 + 0))||/||(124.407943638 / (124.407943638 + 625.63219312))|
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)|
|=||(68.0592071116 / 1012.86516419)||/||(70.1770240969 / 983.864568096)|
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)|
|=||((51.6457217966 + 406.32786202) / 1464.0436957)||/||((0 + 0) / 0)|
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|
|=||(65.0011064049 - 9.59345570397||-||217.368710209)||/||1464.0436957|
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.
Homeinns Hotel Group has a M-score of 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
Homeinns Hotel Group Annual Data
Homeinns Hotel Group Quarterly Data