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CarMax Inc (NYSE:KMX)
Beneish M-Score
-2.00 (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 -2.00 signals that the company is a manipulator.

KMX' s 10-Year Beneish M-Score Range
Min: -3.48   Max: 3.15
Current: -2

-3.48
3.15

During the past 13 years, the highest Beneish M-Score of CarMax Inc was 3.15. The lowest was -3.48. And the median was -2.35.


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 * 0.949+0.528 * 0.9853+0.404 * 1.0357+0.892 * 1.1168+0.115 * 0.9792
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9832+4.679 * 0.0917-0.327 * 1.0453
=-2.00

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

This Year (May15) TTM:Last Year (May14) TTM:
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 $1,294 Mil.
Total Current Liabilities was $1,000 Mil.
Long-Term Debt was $9,176 Mil.
Net Income was 181.974 + 143.138 + 130.049 + 154.518 = $610 Mil.
Non Operating Income was -0.041 + -1.196 + -1.536 + -0.283 = $-3 Mil.
Cash Flow from Operations was 117.554 + -183.515 + -347.996 + -227.539 = $-641 Mil.
Accounts Receivable was $98 Mil.
Revenue was 3750.196 + 3076.283 + 2941.407 + 3245.552 = $13,013 Mil.
Gross Profit was 501.731 + 384.141 + 381.721 + 434.743 = $1,702 Mil.
Total Current Assets was $2,637 Mil.
Total Assets was $12,149 Mil.
Property, Plant and Equipment(Net PPE) was $1,697 Mil.
Depreciation, Depletion and Amortization(DDA) was $105 Mil.
Selling, General & Admin. Expense(SGA) was $1,178 Mil.
Total Current Liabilities was $962 Mil.
Long-Term Debt was $7,689 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)
=(103.663 / 14533.408) / (97.81 / 13013.438)
=0.00713274 / 0.00751608
=0.949

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)
=(475.837 / 13013.438) / (543.794 / 14533.408)
=0.1308137 / 0.13276927
=0.9853

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 - (2665.825 + 1896.348) / 13670.677) / (1 - (2636.736 + 1696.94) / 12148.96)
=0.66628039 / 0.64328831
=1.0357

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
=14533.408 / 13013.438
=1.1168

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))
=(104.919 / (104.919 + 1696.94)) / (119.896 / (119.896 + 1896.348))
=0.0582282 / 0.05946503
=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)
=(1294.058 / 14533.408) / (1178.472 / 13013.438)
=0.08904023 / 0.09055808
=0.9832

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)
=((9176.253 + 999.573) / 13670.677) / ((7688.765 + 962.158) / 12148.96)
=0.74435421 / 0.71207107
=1.0453

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
=(609.679 - -3.056 - -641.496) / 13670.677
=0.0917

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 -2.00 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.

CarMax Inc Annual Data

Feb06Feb07Feb08Feb09Feb10Feb11Feb12Feb13Feb14Feb15
DSRI 0.84530.78150.93361.21831.22341.00110.64840.97090.75771.5182
GMI 0.97860.97110.99450.94210.94381.01471.05191.03181.01880.9912
AQI 2.69980.97141.10471.32070.646115.8510.94650.99651.01791.0457
SGI 1.191.19261.09830.85051.07121.20151.11451.09591.1471.1348
DEPI 0.93091.00810.98170.93010.89950.81.25940.9731.07640.9972
SGAI 1.00240.99821.00691.20860.86620.89340.960510.97690.9594
LVGI 0.9320.87721.0620.91450.70243.27111.02391.02361.03671.0598
TATA -0.0489-0.03760.0068-0.08630.09050.05610.05710.12250.09460.1189
M-score -1.99-2.67-2.41-2.73-1.853.22-2.40-1.84-2.11-1.33

CarMax Inc Quarterly Data

Feb13May13Aug13Nov13Feb14May14Aug14Nov14Feb15May15
DSRI 0.97090.94161.04060.93460.75771.22681.14111.15521.51820.949
GMI 1.03181.02491.01681.01911.01881.01751.0291.02080.99120.9853
AQI 0.99651.00531.00891.01481.01791.02611.03631.03761.04571.0357
SGI 1.09591.13871.16731.16171.1471.13171.11511.12211.13481.1168
DEPI 0.9730.98721.04151.05651.07641.07711.02971.00680.99720.9792
SGAI 10.98410.96060.95830.97690.97540.97590.97210.95940.9832
LVGI 1.02361.05061.06211.05031.03671.0331.0331.06611.05981.0453
TATA 0.11490.11480.11390.11270.09460.10390.10620.11370.11890.0917
M-score -1.88-1.87-1.76-1.86-2.11-1.65-1.72-1.69-1.33-2.00
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