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Harley-Davidson Inc (NYSE:HOG)
Beneish M-Score
-2.61 (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 -2.61 suggests that the company is not a manipulator.

HOG' s 10-Year Beneish M-Score Range
Min: -3.67   Max: -0.89
Current: -2.61

-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 -2.61.


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 * 0.9328+0.528 * 0.9741+0.404 * 1.0284+0.892 * 1.0576+0.115 * 0.9792
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9561+4.679 * -0.0278-0.327 * 0.9821
=-2.61

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

This Year (Sep14) TTM:Last Year (Sep13) TTM:
Accounts Receivable was $286 Mil.
Revenue was 1301.604 + 2000.699 + 1726.048 + 1190.634 = $6,219 Mil.
Gross Profit was 525.505 + 849.812 + 707.634 + 443.6 = $2,527 Mil.
Total Current Assets was $4,202 Mil.
Total Assets was $10,026 Mil.
Property, Plant and Equipment(Net PPE) was $827 Mil.
Depreciation, Depletion and Amortization(DDA) was $175 Mil.
Selling, General & Admin. Expense(SGA) was $1,143 Mil.
Total Current Liabilities was $2,707 Mil.
Long-Term Debt was $3,573 Mil.
Net Income was 150.066 + 354.153 + 265.917 + 75.409 = $846 Mil.
Non Operating Income was 0 + 0 + 0 + 5.859 = $6 Mil.
Cash Flow from Operations was 396.276 + 367.006 + 203.586 + 151.99 = $1,119 Mil.
Accounts Receivable was $290 Mil.
Revenue was 1343.718 + 1794.307 + 1571.213 + 1170.86 = $5,880 Mil.
Gross Profit was 539.805 + 719.205 + 635.853 + 432.128 = $2,327 Mil.
Total Current Assets was $4,093 Mil.
Total Assets was $9,484 Mil.
Property, Plant and Equipment(Net PPE) was $795 Mil.
Depreciation, Depletion and Amortization(DDA) was $164 Mil.
Selling, General & Admin. Expense(SGA) was $1,131 Mil.
Total Current Liabilities was $1,982 Mil.
Long-Term Debt was $4,068 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)
=(286.256 / 6218.985) / (290.158 / 5880.098)
=0.04602938 / 0.04934578
=0.9328

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)
=(849.812 / 5880.098) / (525.505 / 6218.985)
=0.39574017 / 0.40626421
=0.9741

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 - (4202.478 + 826.764) / 10025.506) / (1 - (4092.675 + 795.235) / 9484.008)
=0.49835529 / 0.48461558
=1.0284

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
=6218.985 / 5880.098
=1.0576

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))
=(164.193 / (164.193 + 795.235)) / (175.102 / (175.102 + 826.764))
=0.17113634 / 0.17477587
=0.9792

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)
=(1143.497 / 6218.985) / (1130.874 / 5880.098)
=0.18387197 / 0.1923223
=0.9561

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)
=((3573.118 + 2707.044) / 10025.506) / ((4067.733 + 1981.716) / 9484.008)
=0.62641846 / 0.63785786
=0.9821

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
=(845.545 - 5.859 - 1118.858) / 10025.506
=-0.0278

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 -2.61 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 0.99530.94461.07911.28321.40791.26440.95850.76370.99981.0733
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 -2.77-2.36-2.36-2.10-1.48-2.05-2.95-2.72-2.50-2.47

Harley-Davidson Inc Quarterly Data

Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14
DSRI 0.83260.83650.99980.94731.00611.07741.07331.18271.05580.9328
GMI 0.98630.96070.96010.96560.9640.97350.97750.98180.97090.9741
AQI 0.98240.96021.05051.00770.95811.07791.03611.03561.05271.0284
SGI 1.13141.07341.05061.03731.0081.05121.05721.05811.0821.0576
DEPI 1.12381.00411.11321.10811.11731.14651.03721.03941.0150.9792
SGAI 0.93730.97480.99690.98580.99910.9710.95920.95750.94190.9561
LVGI 0.97440.99510.9470.96850.99330.9430.98380.95880.95070.9821
TATA 0.0006-0.0039-0.0204-0.0107-0.0216-0.0203-0.0265-0.0534-0.0303-0.0278
M-score -2.49-2.61-2.50-2.54-2.59-2.40-2.47-2.48-2.46-2.61
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