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HRG Group Inc (NYSE:HRG)
Beneish M-Score
0.80 (As of Today)

Warning Sign:

Beneish M-Score 0.80 higher than -2.22, which implies that it might have manipulated its financial results.

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.

HRG Group Inc has a M-score of 0.80 signals that the company is a manipulator.

HRG' s 10-Year Beneish M-Score Range
Min: -6.49   Max: 537.5
Current: 0.8

-6.49
537.5

During the past 13 years, the highest Beneish M-Score of HRG Group Inc was 537.50. The lowest was -6.49. And the median was -2.41.


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 HRG Group 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 * 4.7786+0.528 * 1.0734+0.404 * 0.9302+0.892 * 0.9873+0.115 * 0.8339
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.013+4.679 * -0.0279-0.327 * 1.1339
=0.80

* 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 $3,137 Mil.
Revenue was 1553.5 + 1371.5 + 1438.4 + 1512.4 = $5,876 Mil.
Gross Profit was 739.9 + 641.2 + 705.9 + 714.5 = $2,802 Mil.
Total Current Assets was $5,500 Mil.
Total Assets was $32,970 Mil.
Property, Plant and Equipment(Net PPE) was $856 Mil.
Depreciation, Depletion and Amortization(DDA) was $339 Mil.
Selling, General & Admin. Expense(SGA) was $2,120 Mil.
Total Current Liabilities was $927 Mil.
Long-Term Debt was $6,833 Mil.
Net Income was -75.6 + -228.3 + -109.8 + -6.3 = $-420 Mil.
Non Operating Income was 39.8 + 18 + 174 + -11.7 = $220 Mil.
Cash Flow from Operations was 109.5 + -102.7 + -171.7 + 443.5 = $279 Mil.
Accounts Receivable was $665 Mil.
Revenue was 1599.4 + 1341.2 + 1510 + 1500.8 = $5,951 Mil.
Gross Profit was 866.8 + 662 + 774.5 + 742.4 = $3,046 Mil.
Total Current Assets was $3,027 Mil.
Total Assets was $29,885 Mil.
Property, Plant and Equipment(Net PPE) was $925 Mil.
Depreciation, Depletion and Amortization(DDA) was $287 Mil.
Selling, General & Admin. Expense(SGA) was $2,120 Mil.
Total Current Liabilities was $900 Mil.
Long-Term Debt was $5,303 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)
=(3136.9 / 5875.8) / (664.9 / 5951.4)
=0.53386773 / 0.11172161
=4.7786

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)
=(641.2 / 5951.4) / (739.9 / 5875.8)
=0.51176194 / 0.47678614
=1.0734

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 - (5499.6 + 855.8) / 32970) / (1 - (3027.4 + 924.5) / 29885.2)
=0.80723688 / 0.86776398
=0.9302

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
=5875.8 / 5951.4
=0.9873

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))
=(286.7 / (286.7 + 924.5)) / (339.2 / (339.2 + 855.8))
=0.2367074 / 0.28384937
=0.8339

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)
=(2119.9 / 5875.8) / (2119.7 / 5951.4)
=0.36078491 / 0.3561683
=1.013

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)
=((6832.7 + 927.2) / 32970) / ((5303.4 + 899.9) / 29885.2)
=0.23536245 / 0.20757097
=1.1339

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
=(-420 - 220.1 - 278.6) / 32970
=-0.0279

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.

HRG Group Inc has a M-score of 0.80 signals that the company is likely to 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.

HRG Group Inc Annual Data

Dec05Dec06Dec07Dec08Dec09Dec10Sep11Sep12Sep13Sep14
DSRI 1111110.20840.72981.20050.8587
GMI 1111110.39260.78041.03410.9995
AQI 4.70640.75370.66690.66690.61818.612410.32460.96670.94961.0394
SGI 00000029.49121.28841.23721.0757
DEPI 0.14160.10920.09360.09360.56140.38490.29630.57652.06421.0619
SGAI 1111113.10021.11090.82821.1608
LVGI 0.27640.05390.03170.03170.06412.91540.46960.98011.82640.9714
TATA -0.0517-0.1517-0.0012-0.0012-0.078-0.0183-0.0108-0.0159-0.0165-0.0194
M-score -1.98-3.97-3.30-3.30-3.64-1.0825.33-2.74-2.28-2.63

HRG Group Inc Quarterly Data

Mar13Jun13Sep13Dec13Mar14Jun14Sep14Dec14Mar15Jun15
DSRI 1.19641.16121.20050.88631.04161.17260.85871.01224.5484.7786
GMI 0.96290.94741.03411.04221.03921.00910.99951.00661.00491.0734
AQI 0.83770.83660.94960.97041.01751.11631.03941.00781.01440.9302
SGI 1.15451.25571.23721.28521.18971.13591.07571.01031.02790.9873
DEPI 1.92541.74262.06421.92030.91081.13381.06191.13851.15790.8339
SGAI 0.90910.86520.82820.94680.95571.0561.16181.13031.13671.013
LVGI 1.63141.71431.82641.21541.091.05230.97140.9990.97381.1339
TATA -0.008-0.0089-0.0165-0.0177-0.0172-0.0195-0.0194-0.0262-0.0282-0.0279
M-score -2.37-2.36-2.28-2.36-2.36-2.25-2.63-2.580.690.80
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