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CarMax Inc (NYSE:KMX)
Beneish M-Score
-2.24 (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.

CarMax Inc has a M-score of -2.24 suggests that the company is not a manipulator.

KMX' s Beneish M-Score Range Over the Past 10 Years
Min: -3.45   Max: 4.25
Current: -2.24

-3.45
4.25

During the past 13 years, the highest Beneish M-Score of CarMax Inc was 4.25. The lowest was -3.45. And the median was -2.24.


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 CarMax 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 * 0.942+0.528 * 0.9896+0.404 * 1.0289+0.892 * 1.0501+0.115 * 0.9689
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9421+4.679 * 0.0548-0.327 * 1.0532
=-2.24

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

This Year (May16) TTM:Last Year (May15) TTM:
Accounts Receivable was $103 Mil.
Revenue was 4126.386 + 3705.805 + 3544.069 + 3884.913 = $15,261 Mil.
Gross Profit was 572.637 + 489.265 + 464.331 + 521.37 = $2,048 Mil.
Total Current Assets was $2,417 Mil.
Total Assets was $14,790 Mil.
Property, Plant and Equipment(Net PPE) was $2,234 Mil.
Depreciation, Depletion and Amortization(DDA) was $146 Mil.
Selling, General & Admin. Expense(SGA) was $1,151 Mil.
Total Current Liabilities was $1,083 Mil.
Long-Term Debt was $10,511 Mil.
Net Income was 175.36 + 141.027 + 128.199 + 172.228 = $617 Mil.
Non Operating Income was 0.616 + -9.768 + -1.157 + -1.593 = $-12 Mil.
Cash Flow from Operations was 85.364 + 232.686 + -296.835 + -202.298 = $-181 Mil.
Accounts Receivable was $104 Mil.
Revenue was 4014.888 + 3514.092 + 3405.234 + 3599.194 = $14,533 Mil.
Gross Profit was 543.794 + 475.837 + 446.62 + 463.339 = $1,930 Mil.
Total Current Assets was $2,666 Mil.
Total Assets was $13,671 Mil.
Property, Plant and Equipment(Net PPE) was $1,896 Mil.
Depreciation, Depletion and Amortization(DDA) was $120 Mil.
Selling, General & Admin. Expense(SGA) was $1,163 Mil.
Total Current Liabilities was $1,000 Mil.
Long-Term Debt was $9,176 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)
=(102.541 / 15261.173) / (103.663 / 14533.408)
=0.00671908 / 0.00713274
=0.942

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)
=(1929.59 / 14533.408) / (2047.603 / 15261.173)
=0.13276927 / 0.13417075
=0.9896

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 - (2416.58 + 2234.385) / 14789.927) / (1 - (2665.825 + 1896.348) / 13670.677)
=0.68553158 / 0.66628039
=1.0289

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
=15261.173 / 14533.408
=1.0501

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))
=(119.896 / (119.896 + 1896.348)) / (146.095 / (146.095 + 2234.385))
=0.05946503 / 0.06137208
=0.9689

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)
=(1150.986 / 15261.173) / (1163.458 / 14533.408)
=0.07541924 / 0.08005404
=0.9421

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)
=((10511.332 + 1083.374) / 14789.927) / ((9176.253 + 999.573) / 13670.677)
=0.78395965 / 0.74435421
=1.0532

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
=(616.814 - -11.902 - -181.083) / 14789.927
=0.0548

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.

CarMax Inc has a M-score of -2.24 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.

CarMax Inc Annual Data

Feb07Feb08Feb09Feb10Feb11Feb12Feb13Feb14Feb15Feb16
DSRI 0.78150.93361.21831.22341.00110.64840.97090.75771.51820.9041
GMI 0.97110.99450.94210.94381.01471.05191.03181.01880.99120.9927
AQI 0.97141.10471.32070.646115.8510.94650.99651.01791.04671.0264
SGI 1.19261.09830.85051.07121.20151.11451.09591.1471.13481.0617
DEPI 1.00810.98170.93010.89950.81.25940.9731.07640.99720.9747
SGAI 0.99821.00691.20860.86620.89340.960510.97690.95941.0124
LVGI 0.87721.0620.91450.70243.27111.02391.02361.03671.05981.0536
TATA -0.03760.0068-0.10250.09050.05610.05710.12250.09460.11890.0542
M-score -2.67-2.41-2.81-1.853.22-2.40-1.84-2.11-1.33-2.28

CarMax Inc Quarterly Data

Feb14May14Aug14Nov14Feb15May15Aug15Nov15Feb16May16
DSRI 0.75771.22681.14111.15521.51820.9490.83550.92830.90410.942
GMI 1.01881.01751.0291.02080.99120.98530.96550.96850.99270.9896
AQI 1.01791.02611.03631.03761.04671.03571.03111.02051.02641.0289
SGI 1.1471.13171.11511.12211.13481.11681.10861.08151.06171.0501
DEPI 1.07641.07711.02971.00680.99720.97921.00120.99280.97470.9689
SGAI 0.97690.97540.97590.97210.95940.8840.72980.74420.74130.9421
LVGI 1.03671.0331.0331.06611.05981.04531.05411.0591.05361.0532
TATA 0.09460.10390.10620.11370.11890.09170.08940.08310.05420.0548
M-score -2.11-1.65-1.72-1.69-1.33-1.98-2.09-2.07-2.23-2.24
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