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CarMax Inc (NYSE:KMX)
Beneish M-Score
-2.42 (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 -2.42 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: -2.42

-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 * 0.9041+0.528 * 0.9954+0.404 * 0.9944+0.892 * 1.0374+0.115 * 0.9305
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.4158+4.679 * 0.0465-0.327 * 1.0453
=-2.42

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

This Year (Aug16) TTM:Last Year (Aug15) TTM:
Accounts Receivable was $95 Mil.
Revenue was 3997.248 + 4126.386 + 3705.805 + 3544.069 = $15,374 Mil.
Gross Profit was 545.362 + 572.637 + 489.265 + 464.331 = $2,072 Mil.
Total Current Assets was $2,755 Mil.
Total Assets was $15,504 Mil.
Property, Plant and Equipment(Net PPE) was $2,326 Mil.
Depreciation, Depletion and Amortization(DDA) was $155 Mil.
Selling, General & Admin. Expense(SGA) was $1,418 Mil.
Total Current Liabilities was $1,084 Mil.
Long-Term Debt was $11,131 Mil.
Net Income was 162.362 + 175.36 + 141.027 + 128.199 = $607 Mil.
Non Operating Income was 0.435 + 0.616 + -9.768 + -1.157 = $-10 Mil.
Cash Flow from Operations was -125.205 + 85.364 + 232.686 + -296.835 = $-104 Mil.
Accounts Receivable was $101 Mil.
Revenue was 3884.913 + 4014.888 + 3514.092 + 3405.234 = $14,819 Mil.
Gross Profit was 521.37 + 543.794 + 475.837 + 446.62 = $1,988 Mil.
Total Current Assets was $2,504 Mil.
Total Assets was $13,953 Mil.
Property, Plant and Equipment(Net PPE) was $2,017 Mil.
Depreciation, Depletion and Amortization(DDA) was $125 Mil.
Selling, General & Admin. Expense(SGA) was $965 Mil.
Total Current Liabilities was $1,002 Mil.
Long-Term Debt was $9,514 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)
=(94.577 / 15373.508) / (100.832 / 14819.127)
=0.00615195 / 0.00680418
=0.9041

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)
=(1987.621 / 14819.127) / (2071.595 / 15373.508)
=0.13412538 / 0.13475096
=0.9954

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 - (2755.347 + 2326.178) / 15504.332) / (1 - (2503.725 + 2016.52) / 13952.565)
=0.67225128 / 0.67602767
=0.9944

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
=15373.508 / 14819.127
=1.0374

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))
=(124.595 / (124.595 + 2016.52)) / (155.185 / (155.185 + 2326.178))
=0.05819164 / 0.06254022
=0.9305

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)
=(1417.728 / 15373.508) / (965.236 / 14819.127)
=0.0922189 / 0.06513447
=1.4158

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)
=((11130.646 + 1084.363) / 15504.332) / ((9514.052 + 1001.977) / 13952.565)
=0.78784491 / 0.75369862
=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
=(606.948 - -9.874 - -103.99) / 15504.332
=0.0465

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 -2.42 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 local exchange's 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 0.97141.10471.32070.646115.8510.94650.99651.01791.04671.0256
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 0.87721.0620.91450.70243.27111.02391.02361.03671.05981.0531
TATA -0.03760.0068-0.10250.09050.05610.05710.12250.09460.11890.0543
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

May14Aug14Nov14Feb15May15Aug15Nov15Feb16May16Aug16
DSRI 1.22681.14111.15521.51820.9490.83550.92830.90410.9420.9041
GMI 1.01751.0291.02080.99120.98530.96550.96850.99270.98960.9954
AQI 1.02611.03631.03761.04671.03571.03111.02051.02561.02890.9944
SGI 1.13171.11511.12211.13481.11681.10861.08151.06171.05011.0374
DEPI 1.07711.02971.00680.99720.97921.00120.99280.97470.96890.9305
SGAI 0.97540.97590.97210.95940.8840.72990.74420.74130.94211.4158
LVGI 1.0331.0331.06611.05981.04531.05411.0591.05311.05321.0453
TATA 0.10390.10620.11370.11890.09170.08940.08310.05430.05480.0465
M-score -1.65-1.72-1.69-1.33-1.98-2.09-2.07-2.23-2.24-2.42
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