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Harley-Davidson Inc (NYSE:HOG)
Beneish M-Score
-2.56 (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 -2.56 suggests that the company is not a manipulator.

HOG' s 10-Year Beneish M-Score Range
Min: -2.91   Max: -1.34
Current: -2.56

-2.91
-1.34

During the past 13 years, the highest Beneish M-Score of Harley-Davidson Inc was -1.34. The lowest was -2.91. And the median was -2.60.


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 * 0.9754+0.528 * 0.9775+0.404 * 1.0361+0.892 * 1.0572+0.115 * 1.0372
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9592+4.679 * -0.0267-0.327 * 0.9838
=-2.56

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

This Year (Dec13) TTM:Last Year (Dec12) TTM:
Accounts Receivable was $2,035 Mil.
Revenue was 1190.634 + 1343.718 + 1794.307 + 1571.213 = $5,900 Mil.
Gross Profit was 443.6 + 539.805 + 719.205 + 635.853 = $2,338 Mil.
Total Current Assets was $3,989 Mil.
Total Assets was $9,405 Mil.
Property, Plant and Equipment(Net PPE) was $842 Mil.
Depreciation, Depletion and Amortization(DDA) was $167 Mil.
Selling, General & Admin. Expense(SGA) was $1,127 Mil.
Total Current Liabilities was $2,510 Mil.
Long-Term Debt was $3,417 Mil.
Net Income was 75.409 + 162.716 + 271.739 + 224.129 = $734 Mil.
Non Operating Income was 5.859 + 0 + 1.77 + 0 = $8 Mil.
Cash Flow from Operations was 151.99 + 435.426 + 498.166 + -108.489 = $977 Mil.
Accounts Receivable was $1,973 Mil.
Revenue was 1170.86 + 1250.295 + 1729.66 + 1429.691 = $5,581 Mil.
Gross Profit was 432.128 + 492.7 + 675.718 + 561.576 = $2,162 Mil.
Total Current Assets was $4,051 Mil.
Total Assets was $9,171 Mil.
Property, Plant and Equipment(Net PPE) was $815 Mil.
Depreciation, Depletion and Amortization(DDA) was $169 Mil.
Selling, General & Admin. Expense(SGA) was $1,111 Mil.
Total Current Liabilities was $1,503 Mil.
Long-Term Debt was $4,371 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)
=(2034.751 / 5899.872) / (1973.124 / 5580.506)
=0.34488053 / 0.35357439
=0.9754

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)
=(539.805 / 5580.506) / (443.6 / 5899.872)
=0.38744193 / 0.39635826
=0.9775

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 - (3988.803 + 842.477) / 9405.04) / (1 - (4050.936 + 815.464) / 9170.773)
=0.48630947 / 0.46935771
=1.0361

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
=5899.872 / 5580.506
=1.0572

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))
=(168.978 / (168.978 + 815.464)) / (167.072 / (167.072 + 842.477))
=0.17164851 / 0.16549172
=1.0372

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)
=(1126.884 / 5899.872) / (1111.231 / 5580.506)
=0.19100143 / 0.19912728
=0.9592

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)
=((3416.713 + 2509.586) / 9405.04) / ((4370.544 + 1503.082) / 9170.773)
=0.63011949 / 0.64047229
=0.9838

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
=(733.993 - 7.629 - 977.093) / 9405.04
=-0.0267

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 -2.56 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

Dec04Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13
DSRI 1.44410.94871.17191.14531.54890.51961.17810.88690.94880.9754
GMI 0.9510.99160.99231.04270.95251.16020.88331.01660.96010.9775
AQI 0.60661.47790.82771.15340.79712.68281.13040.92631.05051.0361
SGI 1.08451.06521.08580.98731.03990.8031.01621.09311.05061.0572
DEPI 0.91641.02280.97881.06940.93430.74570.9191.31951.11321.0372
SGAI 0.97750.87191.02281.07791.13191.15051.02520.95120.9970.9592
LVGI 1.08940.99071.25051.14441.2021.1370.9940.97610.9470.9838
TATA -0.0305-0.02260.02740.02010.1694-0.0648-0.0912-0.0296-0.0202-0.0265
M-score -2.36-2.36-2.28-2.23-1.35-2.74-2.75-2.61-2.55-2.56

Harley-Davidson Inc Quarterly Data

Sep11Dec11Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13
DSRI 0.86540.88690.85910.93790.93480.94881.04661.06731.01730.9754
GMI 0.84471.01660.99170.98630.96070.96010.96560.9640.97350.9775
AQI 0.98730.92630.94940.98240.96021.05051.00770.95811.07791.0361
SGI 1.1161.09311.13111.13141.07341.05061.03731.0081.05121.0572
DEPI 1.43821.31951.19021.12381.00411.11321.10811.11731.14651.0372
SGAI 0.94010.95120.94770.93730.97480.99690.98580.99910.9710.9592
LVGI 0.96510.97610.97130.97440.99510.9470.96850.99330.9430.9838
TATA -0.0372-0.0296-0.02760.0006-0.0039-0.0204-0.0107-0.0218-0.0205-0.0267
M-score -2.69-2.61-2.61-2.40-2.52-2.55-2.44-2.53-2.46-2.56
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