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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.
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 * 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|
|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
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)|
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)|
|=||(641.2 / 5951.4)||/||(739.9 / 5875.8)|
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 - (5499.6 + 855.8) / 32970)||/||(1 - (3027.4 + 924.5) / 29885.2)|
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))|
|=||(286.7 / (286.7 + 924.5))||/||(339.2 / (339.2 + 855.8))|
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)|
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)|
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|
|=||(-420 - 220.1||-||278.6)||/||32970|
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.
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