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Harley-Davidson Inc (NYSE:HOG)
Beneish M-Score
-2.75 (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 -2.75 suggests that the company is not a manipulator.

HOG' s 10-Year Beneish M-Score Range
Min: -3.67   Max: -0.89
Current: -2.75

-3.67
-0.89

During the past 13 years, the highest Beneish M-Score of Harley-Davidson Inc was -0.89. The lowest was -3.67. And the median was -2.63.


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 * 0.9991+0.528 * 0.9906+0.404 * 0.9771+0.892 * 0.9582+0.115 * 0.9624
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0804+4.679 * -0.0376-0.327 * 1.0812
=-2.75

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

This Year (Jun15) TTM:Last Year (Jun14) TTM:
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 $194 Mil.
Selling, General & Admin. Expense(SGA) was $1,177 Mil.
Total Current Liabilities was $2,523 Mil.
Long-Term Debt was $4,560 Mil.
Net Income was 299.81 + 269.854 + 74.475 + 150.066 = $794 Mil.
Non Operating Income was 1.45 + 0 + 0 + 0 = $1 Mil.
Cash Flow from Operations was 439.244 + 174.7 + 179.809 + 396.276 = $1,190 Mil.
Accounts Receivable was $290 Mil.
Revenue was 2000.699 + 1726.048 + 1190.634 + 1343.718 = $6,261 Mil.
Gross Profit was 849.812 + 707.634 + 443.6 + 539.805 = $2,541 Mil.
Total Current Assets was $4,374 Mil.
Total Assets was $10,076 Mil.
Property, Plant and Equipment(Net PPE) was $826 Mil.
Depreciation, Depletion and Amortization(DDA) was $176 Mil.
Selling, General & Admin. Expense(SGA) was $1,137 Mil.
Total Current Liabilities was $2,454 Mil.
Long-Term Debt was $3,794 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)
=(277.569 / 5999.098) / (289.94 / 6261.099)
=0.04626846 / 0.04630816
=0.9991

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)
=(714.114 / 6261.099) / (779.635 / 5999.098)
=0.4058155 / 0.40968392
=0.9906

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 - (4696.39 + 873.007) / 10564.872) / (1 - (4373.698 + 826.467) / 10076.296)
=0.47283819 / 0.48392098
=0.9771

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
=5999.098 / 6261.099
=0.9582

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))
=(175.53 / (175.53 + 826.467)) / (194.259 / (194.259 + 873.007))
=0.17518017 / 0.18201554
=0.9624

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)
=(1176.618 / 5999.098) / (1136.578 / 6261.099)
=0.19613249 / 0.18153011
=1.0804

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)
=((4560.349 + 2522.724) / 10564.872) / ((3794.396 + 2453.648) / 10076.296)
=0.67043623 / 0.62007349
=1.0812

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
=(794.205 - 1.45 - 1190.029) / 10564.872
=-0.0376

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 -2.75 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

Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14
DSRI 0.94461.07911.28321.40791.26440.95850.76370.99981.07330.8985
GMI 0.99160.99231.04270.95251.16020.88331.01660.96010.97750.9791
AQI 1.47790.82771.15340.79712.68281.13040.92631.05051.03611.0137
SGI 1.06521.08580.98731.03990.8031.01621.09311.05061.05721.0557
DEPI 1.02280.97881.06940.93430.74570.9191.31951.11320.99120.9877
SGAI 0.87191.02281.07791.13191.15051.02520.95120.9970.95920.9747
LVGI 0.99071.25051.14441.2021.1370.9940.97610.9470.98381.0245
TATA -0.02260.02740.02010.1694-0.0648-0.0912-0.0296-0.0202-0.0258-0.0317
M-score -2.36-2.36-2.10-1.48-2.05-2.95-2.72-2.50-2.47-2.68

Harley-Davidson Inc Quarterly Data

Mar13Jun13Sep13Dec13Mar14Jun14Sep14Dec14Mar15Jun15
DSRI 0.94731.00611.07741.07331.18271.05580.93280.89850.84630.9991
GMI 0.96560.9640.97350.97750.98180.97090.97410.97910.97250.9906
AQI 1.00770.95811.07791.03611.03561.05271.02841.01370.97510.9771
SGI 1.03731.0081.05121.05721.05811.0821.05761.05571.01990.9582
DEPI 1.10811.11731.14650.99120.99360.99060.93810.98770.98910.9624
SGAI 0.98580.99910.9710.95920.95750.94190.95610.97471.00561.0804
LVGI 0.96850.99330.9430.98380.95880.95070.98211.02451.06431.0812
TATA -0.0107-0.0216-0.0203-0.0258-0.0528-0.0299-0.0274-0.0319-0.0264-0.0376
M-score -2.54-2.59-2.40-2.47-2.48-2.46-2.61-2.68-2.78-2.75
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