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Harley-Davidson Inc (NYSE:HOG)
Beneish M-Score
-2.47 (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 -2.47 suggests that the company is not a manipulator.

HOG' s 10-Year Beneish M-Score Range
Min: -3.67   Max: -0.89
Current: -2.47

-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 * 1.0507+0.528 * 0.9611+0.404 * 1.0356+0.892 * 1.1911+0.115 * 1.0394
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.8564+4.679 * -0.0531-0.327 * 0.9588
=-2.47

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

This Year (Mar14) TTM:Last Year (Mar13) TTM:
Accounts Receivable was $325 Mil.
Revenue was 1726.048 + 1190.634 + 1343.718 + 1794.307 = $6,055 Mil.
Gross Profit was 655.321 + 386.069 + 492.383 + 676.026 = $2,210 Mil.
Total Current Assets was $4,360 Mil.
Total Assets was $9,730 Mil.
Property, Plant and Equipment(Net PPE) was $823 Mil.
Depreciation, Depletion and Amortization(DDA) was $168 Mil.
Selling, General & Admin. Expense(SGA) was $999 Mil.
Total Current Liabilities was $2,844 Mil.
Long-Term Debt was $3,272 Mil.
Net Income was 265.917 + 75.409 + 162.716 + 271.739 = $776 Mil.
Non Operating Income was 1.659 + 0 + 1.161 + 0 = $3 Mil.
Cash Flow from Operations was 203.586 + 151.99 + 435.426 + 498.166 = $1,289 Mil.
Accounts Receivable was $260 Mil.
Revenue was 1414.248 + 1010.898 + 1089.268 + 1569.047 = $5,083 Mil.
Gross Profit was 519.442 + 321.957 + 377.904 + 563.817 = $1,783 Mil.
Total Current Assets was $4,333 Mil.
Total Assets was $9,335 Mil.
Property, Plant and Equipment(Net PPE) was $790 Mil.
Depreciation, Depletion and Amortization(DDA) was $169 Mil.
Selling, General & Admin. Expense(SGA) was $979 Mil.
Total Current Liabilities was $2,227 Mil.
Long-Term Debt was $3,892 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)
=(324.979 / 6054.707) / (259.673 / 5083.461)
=0.05367378 / 0.05108193
=1.0507

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)
=(386.069 / 5083.461) / (655.321 / 6054.707)
=0.3507689 / 0.36497208
=0.9611

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 - (4360.471 + 823.061) / 9729.791) / (1 - (4332.979 + 790.245) / 9335.121)
=0.46725145 / 0.45118826
=1.0356

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
=6054.707 / 5083.461
=1.1911

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))
=(168.625 / (168.625 + 790.245)) / (167.62 / (167.62 + 823.061))
=0.17585804 / 0.16919674
=1.0394

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)
=(998.59 / 6054.707) / (978.972 / 5083.461)
=0.16492788 / 0.19257982
=0.8564

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)
=((3271.648 + 2844.114) / 9729.791) / ((3892.469 + 2227.183) / 9335.121)
=0.62856047 / 0.65555144
=0.9588

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
=(775.781 - 2.82 - 1289.168) / 9729.791
=-0.0531

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 -2.47 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 0.99530.94461.07911.28321.67361.18650.99980.74790.99080.9506
GMI 0.9510.99160.99231.04271.06961.06740.94611.0240.95890.9571
AQI 0.60661.47790.82771.15340.89232.39661.13040.92631.05051.0361
SGI 1.08451.06521.08580.98730.97690.76630.97421.11631.06011.1937
DEPI 0.91641.02280.97881.06940.93430.74570.9191.31951.11321.0372
SGAI 0.97750.87191.02281.07791.20491.04771.06740.9380.99360.8529
LVGI 1.08940.99071.25051.14441.19711.14170.9940.97610.9470.9838
TATA -0.0305-0.02260.02740.02010.218-0.073-0.1009-0.0304-0.0192-0.0258
M-score -2.77-2.36-2.36-2.10-0.97-2.34-2.97-2.71-2.49-2.45

Harley-Davidson Inc Quarterly Data

Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14
DSRI 0.77110.81920.82821.02420.97221.00471.04150.97651.05070.9686
GMI 0.98270.97520.95940.991.00050.9910.98660.96370.96110.9584
AQI 0.94940.98240.96021.05051.00770.95811.07791.03611.03561.0527
SGI 1.15131.14991.08411.02561.01071.00941.08751.16191.19111.1794
DEPI 1.19021.12381.00411.11321.10811.11731.14651.03721.03941.015
SGAI 0.93680.92450.97060.98890.97280.96260.90680.87620.85640.8648
LVGI 0.97130.97440.99510.9470.96850.99330.9430.98380.95880.9507
TATA -0.02820.0001-0.0043-0.0192-0.0096-0.0205-0.0191-0.0261-0.0531-0.03
M-score -2.68-2.50-2.61-2.48-2.51-2.56-2.38-2.45-2.47-2.45
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