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Beneish M-Score -0.28 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.
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.
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 * 3.4801||+||0.528 * 1.1051||+||0.404 * 0.9991||+||0.892 * 1.0016||+||0.115 * 0.741|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9055||+||4.679 * -0.0285||-||0.327 * 0.9686|
|This Year (Dec15) TTM:||Last Year (Dec14) TTM:|
|Accounts Receivable was $2,301 Mil.|
Revenue was 1226.2 + 1452.5 + 1553.5 + 1371.5 = $5,604 Mil.
Gross Profit was 431 + 592.1 + 739.9 + 641.2 = $2,404 Mil.
Total Current Assets was $3,745 Mil.
Total Assets was $35,033 Mil.
Property, Plant and Equipment(Net PPE) was $664 Mil.
Depreciation, Depletion and Amortization(DDA) was $265 Mil.
Selling, General & Admin. Expense(SGA) was $1,804 Mil.
Total Current Liabilities was $854 Mil.
Long-Term Debt was $6,285 Mil.
Net Income was -33.9 + -143.1 + -75.6 + -228.3 = $-481 Mil.
Non Operating Income was 106.7 + -15.1 + 39.8 + 18 = $149 Mil.
Cash Flow from Operations was -88.9 + 448.5 + 109.5 + -99.7 = $369 Mil.
|Accounts Receivable was $660 Mil.
Revenue was 1141.8 + 1512.4 + 1599.4 + 1341.2 = $5,595 Mil.
Gross Profit was 409.3 + 714.5 + 866.8 + 662 = $2,653 Mil.
Total Current Assets was $2,850 Mil.
Total Assets was $31,207 Mil.
Property, Plant and Equipment(Net PPE) was $1,055 Mil.
Depreciation, Depletion and Amortization(DDA) was $282 Mil.
Selling, General & Admin. Expense(SGA) was $1,989 Mil.
Total Current Liabilities was $900 Mil.
Long-Term Debt was $5,666 Mil.
1. DSRI = Days Sales in Receivables Index
A large increase in DSR could be indicative of revenue inflation.
|DSRI||=||(Receivables_t / Revenue_t)||/||(Receivables_t-1 / Revenue_t-1)|
|=||(2300.9 / 5603.7)||/||(660.1 / 5594.8)|
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.
|=||(GrossProfit_t-1 / Revenue_t-1)||/||(GrossProfit_t / Revenue_t)|
|=||(592.1 / 5594.8)||/||(431 / 5603.7)|
3. AQI = Asset Quality Index
AQI is the ratio of asset quality in year t to year t-1.
|AQI||=||(1 - (CurrentAssets_t + PPE_t) / TotalAssets_t)||/||(1 - (CurrentAssets_t-1 + PPE_t-1) / TotalAssets_t-1)|
|=||(1 - (3745 + 664.3) / 35032.8)||/||(1 - (2849.6 + 1054.8) / 31206.7)|
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.
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))|
|=||(282.1 / (282.1 + 1054.8))||/||(264.5 / (264.5 + 664.3))|
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)|
|=||(1804 / 5603.7)||/||(1989.2 / 5594.8)|
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)|
|=||((6285.4 + 854.1) / 35032.8)||/||((5666 + 899.6) / 31206.7)|
8. TATA = Total Accruals to Total Assets
Total accruals calculated as the change in working capital accounts other than cash less depreciation.
|=||(NetIncome_t - NonOperatingIncome_t||-||CashFlowsfromOperations_t)||/||TotalAssets_t|
|=||(-480.9 - 149.4||-||369.4)||/||35032.8|
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 -0.28 signals that the company is likely to be a manipulator.
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
HRG Group Inc Annual Data
HRG Group Inc Quarterly Data