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Harley-Davidson Inc (NYSE:HOG)
Beneish M-Score
-2.50 (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 -2.50 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: -2.5

-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 -2.59.


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 * 1.1036+0.528 * 1.0188+0.404 * 1.0296+0.892 * 1.0183+0.115 * 1.0065
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0449+4.679 * -0.0226-0.327 * 1.1273
=-2.50

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

This Year (Jun16) TTM:Last Year (Jun15) TTM:
Accounts Receivable was $312 Mil.
Revenue was 1861.077 + 1749.968 + 1180.635 + 1317.43 = $6,109 Mil.
Gross Profit was 755.627 + 717.719 + 453.452 + 529.934 = $2,457 Mil.
Total Current Assets was $4,359 Mil.
Total Assets was $10,348 Mil.
Property, Plant and Equipment(Net PPE) was $951 Mil.
Depreciation, Depletion and Amortization(DDA) was $205 Mil.
Selling, General & Admin. Expense(SGA) was $1,252 Mil.
Total Current Liabilities was $2,513 Mil.
Long-Term Debt was $5,308 Mil.
Net Income was 280.431 + 250.489 + 42.196 + 140.347 = $713 Mil.
Non Operating Income was 0.688 + 0.766 + 0.602 + 3.211 = $5 Mil.
Cash Flow from Operations was 415.159 + 41.131 + 79.161 + 407.013 = $942 Mil.
Accounts Receivable was $278 Mil.
Revenue was 1824.392 + 1672.945 + 1200.157 + 1301.604 = $5,999 Mil.
Gross Profit was 779.635 + 714.114 + 438.48 + 525.505 = $2,458 Mil.
Total Current Assets was $4,696 Mil.
Total Assets was $10,565 Mil.
Property, Plant and Equipment(Net PPE) was $873 Mil.
Depreciation, Depletion and Amortization(DDA) was $190 Mil.
Selling, General & Admin. Expense(SGA) was $1,177 Mil.
Total Current Liabilities was $2,523 Mil.
Long-Term Debt was $4,560 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)
=(311.956 / 6109.11) / (277.569 / 5999.098)
=0.05106407 / 0.04626846
=1.1036

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)
=(2457.734 / 5999.098) / (2456.732 / 6109.11)
=0.40968392 / 0.40214237
=1.0188

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 - (4359.024 + 951.309) / 10348.44) / (1 - (4696.39 + 873.007) / 10564.872)
=0.486847 / 0.47283819
=1.0296

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
=6109.11 / 5999.098
=1.0183

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))
=(189.975 / (189.975 + 873.007)) / (205.39 / (205.39 + 951.309))
=0.17871892 / 0.17756564
=1.0065

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)
=(1252.014 / 6109.11) / (1176.618 / 5999.098)
=0.20494213 / 0.19613249
=1.0449

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)
=((5308.063 + 2512.767) / 10348.44) / ((4560.349 + 2522.724) / 10564.872)
=0.75574966 / 0.67043623
=1.1273

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
=(713.463 - 5.267 - 942.464) / 10348.44
=-0.0226

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 -2.50 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 1.07911.28321.40791.26440.95850.76370.99981.07330.89851.038
GMI 0.99231.04270.95250.98531.04021.01660.96010.97750.97910.9798
AQI 0.82771.15340.79712.68281.13040.92631.05051.03611.01371.0285
SGI 1.08580.98731.03990.8031.01621.09311.05061.05721.05570.9626
DEPI 0.97881.06940.93430.80890.84721.31951.06181.08740.94391.0095
SGAI 1.02281.07791.13191.15051.02520.95120.9970.95920.97471.0932
LVGI 1.25051.14441.2021.1370.9940.97610.9470.98381.02451.178
TATA 0.06540.02010.1694-0.0652-0.0912-0.0296-0.0194-0.0265-0.0317-0.0355
M-score -2.19-2.10-1.48-2.14-2.88-2.72-2.50-2.46-2.69-2.72

Harley-Davidson Inc Quarterly Data

Mar14Jun14Sep14Dec14Mar15Jun15Sep15Dec15Mar16Jun16
DSRI 1.18271.05580.93280.89850.84630.99911.06211.0381.1311.1036
GMI 0.98180.97090.97410.97910.97250.99060.99250.97981.0021.0188
AQI 1.03561.05271.02841.01370.97510.97710.97941.02851.05741.0296
SGI 1.05811.0821.05761.05571.01990.95820.96720.96260.98331.0183
DEPI 1.08951.06491.02790.94390.94560.95660.94541.00951.0051.0065
SGAI 0.95750.94190.95610.97471.00561.08041.07011.09321.08121.0449
LVGI 0.95880.95070.98211.02451.06431.08121.1481.1781.14931.1273
TATA -0.0535-0.0303-0.0278-0.0317-0.0262-0.0376-0.0392-0.0353-0.0229-0.0226
M-score -2.47-2.46-2.61-2.69-2.78-2.75-2.71-2.72-2.52-2.50
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