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CarMax Inc (NYSE:KMX)
Beneish M-Score
-2.09 (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 -2.09 signals that the company is a manipulator.

KMX' s Beneish M-Score Range Over the Past 10 Years
Min: -3.48   Max: 4.3
Current: -2.09

-3.48
4.3

During the past 13 years, the highest Beneish M-Score of CarMax Inc was 4.30. The lowest was -3.48. 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 * 0.9283+0.528 * 0.9685+0.404 * 1.0205+0.892 * 1.0815+0.115 * 0.9928
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.8428+4.679 * 0.0831-0.327 * 1.059
=-2.09

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

This Year (Nov15) TTM:Last Year (Nov14) TTM:
Accounts Receivable was $89 Mil.
Revenue was 3544.069 + 3884.913 + 4014.888 + 3514.092 = $14,958 Mil.
Gross Profit was 464.331 + 521.37 + 543.794 + 475.837 = $2,005 Mil.
Total Current Assets was $2,635 Mil.
Total Assets was $14,381 Mil.
Property, Plant and Equipment(Net PPE) was $2,106 Mil.
Depreciation, Depletion and Amortization(DDA) was $131 Mil.
Selling, General & Admin. Expense(SGA) was $1,117 Mil.
Total Current Liabilities was $924 Mil.
Long-Term Debt was $10,316 Mil.
Net Income was 128.199 + 172.228 + 181.974 + 143.138 = $626 Mil.
Non Operating Income was -1.157 + -1.593 + -0.041 + -1.196 = $-4 Mil.
Cash Flow from Operations was -296.835 + -202.298 + 117.554 + -183.515 = $-565 Mil.
Accounts Receivable was $88 Mil.
Revenue was 3405.234 + 3599.194 + 3750.196 + 3076.283 = $13,831 Mil.
Gross Profit was 446.62 + 463.339 + 501.731 + 384.141 = $1,796 Mil.
Total Current Assets was $2,573 Mil.
Total Assets was $12,843 Mil.
Property, Plant and Equipment(Net PPE) was $1,834 Mil.
Depreciation, Depletion and Amortization(DDA) was $113 Mil.
Selling, General & Admin. Expense(SGA) was $1,225 Mil.
Total Current Liabilities was $928 Mil.
Long-Term Debt was $8,550 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)
=(88.53 / 14957.962) / (88.18 / 13830.907)
=0.00591859 / 0.00637558
=0.9283

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)
=(521.37 / 13830.907) / (464.331 / 14957.962)
=0.12984188 / 0.13406452
=0.9685

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 - (2634.883 + 2105.807) / 14381.165) / (1 - (2573.252 + 1833.6) / 12843.406)
=0.67035424 / 0.65687825
=1.0205

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
=14957.962 / 13830.907
=1.0815

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))
=(112.922 / (112.922 + 1833.6)) / (130.683 / (130.683 + 2105.807))
=0.05801219 / 0.05843219
=0.9928

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)
=(1116.684 / 14957.962) / (1225.17 / 13830.907)
=0.07465482 / 0.08858204
=0.8428

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)
=((10315.946 + 923.554) / 14381.165) / ((8550.397 + 928.182) / 12843.406)
=0.78154308 / 0.73801132
=1.059

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
=(625.539 - -3.987 - -565.094) / 14381.165
=0.0831

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 -2.09 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

Aug13Nov13Feb14May14Aug14Nov14Feb15May15Aug15Nov15
DSRI 1.04060.93460.75771.22681.14111.15521.51820.9490.83550.9283
GMI 1.01681.01911.01881.01751.0291.02080.99120.98530.96550.9685
AQI 1.00891.01481.01791.02611.03631.03761.04571.03571.03111.0205
SGI 1.16731.16171.1471.13171.11511.12211.13481.11681.10861.0815
DEPI 1.04151.05651.07641.07711.02971.00680.99720.97921.00120.9928
SGAI 0.96060.95830.97690.97540.97590.97210.95940.98320.82860.8428
LVGI 1.06211.05031.03671.0331.0331.06611.05981.04531.05411.059
TATA 0.11390.11270.09460.10390.10620.11370.11890.09170.08940.0831
M-score -1.76-1.86-2.11-1.65-1.72-1.69-1.33-2.00-2.11-2.09
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