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Harley-Davidson Inc (NYSE:HOG)
Beneish M-Score
-2.68 (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 -2.68 suggests that the company is not a manipulator.

HOG' s 10-Year Beneish M-Score Range
Min: -3.67   Max: -1.47
Current: -2.68

-3.67
-1.47

During the past 13 years, the highest Beneish M-Score of Harley-Davidson Inc was -1.47. The lowest was -3.67. And the median was -2.69.


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 * 0.8985+0.528 * 0.9791+0.404 * 1.0137+0.892 * 1.0557+0.115 * 0.9877
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9747+4.679 * -0.0317-0.327 * 1.0245
=-2.68

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

This Year (Dec14) TTM:Last Year (Dec13) TTM:
Accounts Receivable was $248 Mil.
Revenue was 1200.157 + 1301.604 + 2000.699 + 1726.048 = $6,229 Mil.
Gross Profit was 438.48 + 525.505 + 849.812 + 707.634 = $2,521 Mil.
Total Current Assets was $3,948 Mil.
Total Assets was $9,528 Mil.
Property, Plant and Equipment(Net PPE) was $883 Mil.
Depreciation, Depletion and Amortization(DDA) was $188 Mil.
Selling, General & Admin. Expense(SGA) was $1,160 Mil.
Total Current Liabilities was $2,389 Mil.
Long-Term Debt was $3,762 Mil.
Net Income was 74.475 + 150.066 + 354.153 + 265.917 = $845 Mil.
Non Operating Income was 0 + 0 + 0 + 0 = $0 Mil.
Cash Flow from Operations was 179.809 + 396.276 + 367.006 + 203.586 = $1,147 Mil.
Accounts Receivable was $261 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 $176 Mil.
Selling, General & Admin. Expense(SGA) was $1,127 Mil.
Total Current Liabilities was $2,510 Mil.
Long-Term Debt was $3,417 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)
=(247.621 / 6228.508) / (261.065 / 5899.872)
=0.03975607 / 0.04424927
=0.8985

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)
=(525.505 / 5899.872) / (438.48 / 6228.508)
=0.39635826 / 0.40482103
=0.9791

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 - (3948.095 + 883.077) / 9528.097) / (1 - (3988.803 + 842.477) / 9405.04)
=0.4929552 / 0.48630947
=1.0137

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
=6228.508 / 5899.872
=1.0557

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))
=(176.448 / (176.448 + 842.477)) / (187.742 / (187.742 + 883.077))
=0.17317074 / 0.17532562
=0.9877

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)
=(1159.502 / 6228.508) / (1126.884 / 5899.872)
=0.18616047 / 0.19100143
=0.9747

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)
=((3761.528 + 2389.286) / 9528.097) / ((3416.713 + 2509.586) / 9405.04)
=0.64554486 / 0.63011949
=1.0245

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
=(844.611 - 0 - 1146.677) / 9528.097
=-0.0317

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 -2.68 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

Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14Dec14
DSRI 0.83650.99980.94731.00611.07741.07331.18271.05580.93280.8985
GMI 0.96070.96010.96560.9640.97350.97750.98180.97090.97410.9791
AQI 0.96021.05051.00770.95811.07791.03611.03561.05271.02841.0137
SGI 1.07341.05061.03731.0081.05121.05721.05811.0821.05761.0557
DEPI 1.00411.11321.10811.11731.14650.99120.99360.97120.93810.9877
SGAI 0.97480.99690.98580.99910.9710.95920.95750.94190.95610.9747
LVGI 0.99510.9470.96850.99330.9430.98380.95880.95070.98211.0245
TATA -0.0039-0.0204-0.0107-0.0216-0.0203-0.0258-0.0528-0.0298-0.0273-0.0317
M-score -2.61-2.50-2.54-2.59-2.40-2.47-2.48-2.47-2.61-2.68
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