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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 12 years, the highest Beneish M-Score of Homeinns Hotel Group was -1.03. The lowest was -9.80. And the median was -1.98.
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 * 1.0763||+||0.528 * 0.8437||+||0.404 * 1.0597||+||0.892 * 1.0756||+||0.115 * 0.8991|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0421||+||4.679 * -0.0899||-||0.327 * 0.4936|
|This Year (Sep14) TTM:||Last Year (Sep13) TTM:|
|Accounts Receivable was $19.9 Mil.|
Revenue was 287.452673422 + 255.836356049 + 223.261623198 + 248.797003622 = $1,015.3 Mil.
Gross Profit was 64.7067544231 + 51.3568516676 + 20.7255791349 + 38.4142245637 = $175.2 Mil.
Total Current Assets was $200.5 Mil.
Total Assets was $1,508.7 Mil.
Property, Plant and Equipment(Net PPE) was $654.8 Mil.
Depreciation, Depletion and Amortization(DDA) was $117.6 Mil.
Selling, General & Admin. Expense(SGA) was $73.2 Mil.
Total Current Liabilities was $285.3 Mil.
Long-Term Debt was $0.0 Mil.
Net Income was 39.9973933726 + 17.360446827 + 12.1278146768 + 2.11606848864 = $71.6 Mil.
Non Operating Income was 9.15186862598 + -3.47799569865 + 11.3465089908 + -6.07606190319 = $10.9 Mil.
Cash Flow from Operations was 0 + 0 + 0 + 196.290582812 = $196.3 Mil.
|Accounts Receivable was $17.2 Mil.
Revenue was 266.831699346 + 244.97424193 + 211.468222043 + 220.685544682 = $944.0 Mil.
Gross Profit was 54.9866013072 + 44.4819041409 + 15.1547868061 + 22.8002566982 = $137.4 Mil.
Total Current Assets was $265.0 Mil.
Total Assets was $1,532.3 Mil.
Property, Plant and Equipment(Net PPE) was $641.0 Mil.
Depreciation, Depletion and Amortization(DDA) was $101.7 Mil.
Selling, General & Admin. Expense(SGA) was $65.3 Mil.
Total Current Liabilities was $290.3 Mil.
Long-Term Debt was $296.6 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)|
|=||(19.8551692679 / 1015.34765629)||/||(17.1506535948 / 943.959708002)|
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)|
|=||(51.3568516676 / 943.959708002)||/||(64.7067544231 / 1015.34765629)|
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 - (200.507477762 + 654.816069858) / 1508.72128637)||/||(1 - (265.029738562 + 641.024183007) / 1532.29035948)|
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))|
|=||(101.693406064 / (101.693406064 + 641.024183007))||/||(117.629568653 / (117.629568653 + 654.816069858))|
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)|
|=||(73.1949815283 / 1015.34765629)||/||(65.2969518901 / 943.959708002)|
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)|
|=||((0 + 285.265387247) / 1508.72128637)||/||((296.592973856 + 290.333006536) / 1532.29035948)|
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|
|=||(71.6017233651 - 10.9443200149||-||196.290582812)||/||1508.72128637|
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 -2.67 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
Homeinns Hotel Group Annual Data
Homeinns Hotel Group Quarterly Data