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Harley-Davidson Inc (NYSE:HOG)
Beneish M-Score
-2.52 (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.

Harley-Davidson Inc has a M-score of -2.52 suggests that the company is not a manipulator.

HOG' s Beneish M-Score Range Over the Past 10 Years
Min: -3.47   Max: -0.86
Current: -2.52

-3.47
-0.86

During the past 13 years, the highest Beneish M-Score of Harley-Davidson Inc was -0.86. The lowest was -3.47. And the median was -2.61.


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 Harley-Davidson Inc 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 * 1.131+0.528 * 1.002+0.404 * 1.0579+0.892 * 0.9833+0.115 * 0.9681
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0812+4.679 * -0.0229-0.327 * 1.1502
=-2.52

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

This Year (Mar16) TTM:Last Year (Mar15) TTM:
Accounts Receivable was $312 Mil.
Revenue was 1749.968 + 1180.635 + 1317.43 + 1824.392 = $6,072 Mil.
Gross Profit was 717.719 + 453.452 + 529.934 + 779.635 = $2,481 Mil.
Total Current Assets was $4,492 Mil.
Total Assets was $10,468 Mil.
Property, Plant and Equipment(Net PPE) was $933 Mil.
Depreciation, Depletion and Amortization(DDA) was $202 Mil.
Selling, General & Admin. Expense(SGA) was $1,234 Mil.
Total Current Liabilities was $2,588 Mil.
Long-Term Debt was $5,461 Mil.
Net Income was 250.489 + 42.196 + 140.347 + 299.81 = $733 Mil.
Non Operating Income was 0.766 + 0.602 + 3.211 + 1.45 = $6 Mil.
Cash Flow from Operations was 41.131 + 79.161 + 407.013 + 439.244 = $967 Mil.
Accounts Receivable was $280 Mil.
Revenue was 1672.945 + 1200.157 + 1301.604 + 2000.699 = $6,175 Mil.
Gross Profit was 714.114 + 438.48 + 525.505 + 849.812 = $2,528 Mil.
Total Current Assets was $4,707 Mil.
Total Assets was $10,248 Mil.
Property, Plant and Equipment(Net PPE) was $874 Mil.
Depreciation, Depletion and Amortization(DDA) was $182 Mil.
Selling, General & Admin. Expense(SGA) was $1,161 Mil.
Total Current Liabilities was $2,503 Mil.
Long-Term Debt was $4,348 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)
=(311.96 / 6072.425) / (280.497 / 6175.405)
=0.05137322 / 0.04542164
=1.131

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)
=(2527.911 / 6175.405) / (2480.74 / 6072.425)
=0.40935145 / 0.40852542
=1.002

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 - (4491.75 + 932.836) / 10467.671) / (1 - (4707.495 + 873.518) / 10247.86)
=0.48177718 / 0.45539722
=1.0579

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
=6072.425 / 6175.405
=0.9833

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))
=(181.93 / (181.93 + 873.518)) / (202.073 / (202.073 + 932.836))
=0.1723723 / 0.17805216
=0.9681

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)
=(1234.114 / 6072.425) / (1160.83 / 6175.405)
=0.20323248 / 0.18797634
=1.0812

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)
=((5460.553 + 2588.006) / 10467.671) / ((4347.884 + 2502.577) / 10247.86)
=0.76889683 / 0.66847722
=1.1502

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
=(732.842 - 6.029 - 966.549) / 10467.671
=-0.0229

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.

Harley-Davidson Inc has a M-score of -2.52 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.

Harley-Davidson Inc Annual Data

Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15
DSRI 1.01191.36831.49881.18780.95850.76370.99981.07330.89851.038
GMI 0.96691.07011.06960.87741.04021.01660.96010.97750.97910.9798
AQI 0.82771.15340.79712.68281.13040.92631.05051.03611.01371.0285
SGI 1.15790.92580.97690.85481.01621.09311.05061.05721.05570.9626
DEPI 0.97881.06940.86570.8730.84721.31951.06181.08740.94391.0095
SGAI 0.95311.15671.1191.16371.02520.95120.9970.95920.97471.0932
LVGI 1.25051.14441.2021.1370.9940.97610.9470.98381.02451.178
TATA 0.04690.04040.1699-0.0652-0.0912-0.0296-0.0194-0.0265-0.0317-0.0355
M-score -2.27-1.99-1.39-2.21-2.88-2.72-2.50-2.46-2.69-2.72

Harley-Davidson Inc Quarterly Data

Dec13Mar14Jun14Sep14Dec14Mar15Jun15Sep15Dec15Mar16
DSRI 1.07331.18271.05580.93280.89850.84630.99911.06211.0381.131
GMI 0.97750.98180.97090.97410.97910.97250.99060.99250.97981.002
AQI 1.03611.03561.05271.02841.01370.97460.97710.97941.02851.0579
SGI 1.05721.05811.0821.05761.05571.01990.95820.96720.96260.9833
DEPI 1.08741.08951.08771.02790.98060.98160.95380.97950.97180.9681
SGAI 0.95740.95570.94020.95430.97651.00751.08251.07211.09321.0812
LVGI 0.98380.95880.95070.98211.02451.06351.08121.1481.1781.1502
TATA -0.0265-0.0534-0.0305-0.0282-0.0322-0.0269-0.038-0.0395-0.0355-0.0229
M-score -2.46-2.47-2.46-2.61-2.69-2.78-2.76-2.71-2.72-2.52
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