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Harley-Davidson Inc (NYSE:HOG)
Beneish M-Score
-2.46 (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 -2.46 suggests that the company is not a manipulator.

HOG' s 10-Year Beneish M-Score Range
Min: -3.83   Max: -0.78
Current: -2.46

-3.83
-0.78

During the past 13 years, the highest Beneish M-Score of Harley-Davidson Inc was -0.78. The lowest was -3.83. And the median was -2.58.


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 * 1.0494+0.528 * 0.9709+0.404 * 1.0527+0.892 * 1.082+0.115 * 1.0649
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9419+4.679 * -0.0303-0.327 * 0.9507
=-2.46

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

This Year (Jun14) TTM:Last Year (Jun13) TTM:
Accounts Receivable was $2,571 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 $170 Mil.
Selling, General & Admin. Expense(SGA) was $1,137 Mil.
Total Current Liabilities was $2,454 Mil.
Long-Term Debt was $3,794 Mil.
Net Income was 354.153 + 265.917 + 75.409 + 162.716 = $858 Mil.
Non Operating Income was 0 + 0 + 5.859 + 0 = $6 Mil.
Cash Flow from Operations was 367.006 + 203.586 + 151.99 + 435.426 = $1,158 Mil.
Accounts Receivable was $2,265 Mil.
Revenue was 1794.307 + 1571.213 + 1170.86 + 1250.295 = $5,787 Mil.
Gross Profit was 719.205 + 635.853 + 432.128 + 492.7 = $2,280 Mil.
Total Current Assets was $4,454 Mil.
Total Assets was $9,707 Mil.
Property, Plant and Equipment(Net PPE) was $791 Mil.
Depreciation, Depletion and Amortization(DDA) was $176 Mil.
Selling, General & Admin. Expense(SGA) was $1,115 Mil.
Total Current Liabilities was $2,097 Mil.
Long-Term Debt was $4,234 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)
=(2571.452 / 6261.099) / (2264.793 / 5786.675)
=0.41070298 / 0.39138072
=1.0494

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)
=(707.634 / 5786.675) / (849.812 / 6261.099)
=0.39398895 / 0.4058155
=0.9709

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 - (4373.698 + 826.467) / 10076.296) / (1 - (4454.471 + 790.563) / 9707.198)
=0.48392098 / 0.4596758
=1.0527

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
=6261.099 / 5786.675
=1.082

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))
=(175.97 / (175.97 + 790.563)) / (170.438 / (170.438 + 826.467))
=0.18206311 / 0.17096714
=1.0649

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)
=(1136.578 / 6261.099) / (1115.217 / 5786.675)
=0.18153011 / 0.19272155
=0.9419

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)
=((3794.396 + 2453.648) / 10076.296) / ((4234.352 + 2096.689) / 9707.198)
=0.62007349 / 0.65220067
=0.9507

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
=(858.195 - 5.859 - 1158.008) / 10076.296
=-0.0303

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 -2.46 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 1.09921.24651.0991.22131.66140.48441.17810.88690.94880.9754
GMI 0.9510.99160.96691.07011.06960.87741.04021.01660.96010.9775
AQI 0.93280.96110.82771.15340.86822.4631.13040.92631.05051.0361
SGI 1.08451.06521.15790.92580.97690.85481.01621.09311.05061.0572
DEPI 0.91641.02280.97881.06940.89070.84850.84721.31951.06181.0874
SGAI 0.97750.87190.95311.15671.1191.16371.02520.95120.9970.9592
LVGI 1.08940.99071.25051.14441.19711.14170.9940.97610.9470.9838
TATA -0.0549-0.02220.04690.00290.1699-0.0652-0.1093-0.0296-0.0194-0.0265
M-score -2.66-2.29-2.19-2.30-1.21-2.95-2.76-2.61-2.55-2.55

Harley-Davidson Inc Quarterly Data

Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14
DSRI 0.85910.93790.93480.94881.04661.06731.01730.97541.03191.0494
GMI 0.94750.90830.85460.96010.96560.9640.97350.97750.98180.9709
AQI 0.94940.98240.96021.05051.00770.95811.07791.03611.03561.0527
SGI 1.13111.13141.07341.05061.03731.0081.05121.05721.05811.082
DEPI 1.25221.17811.14841.06181.04321.0651.05341.08741.08951.0649
SGAI 0.94770.93730.97480.99690.98580.99910.9710.95920.95750.9419
LVGI 0.97130.97440.82870.9470.96850.99331.13240.98380.95880.9507
TATA -0.02760.0009-0.0037-0.0194-0.0097-0.0208-0.0195-0.0265-0.0534-0.0303
M-score -2.62-2.43-2.51-2.55-2.45-2.53-2.52-2.55-2.61-2.46
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