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CarMax Inc (NYSE:KMX)
Beneish M-Score
-1.72 (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 -1.72 signals that the company is a manipulator.

KMX' s 10-Year Beneish M-Score Range
Min: -3.48   Max: 3.15
Current: -1.72

-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 * 1.1411+0.528 * 1.029+0.404 * 1.0363+0.892 * 1.1151+0.115 * 1.0297
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9759+4.679 * 0.1062-0.327 * 1.033
=-1.72

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

This Year (Aug14) TTM:Last Year (Aug13) TTM:
Accounts Receivable was $109 Mil.
Revenue was 3599.194 + 3750.196 + 3076.283 + 2941.407 = $13,367 Mil.
Gross Profit was 463.339 + 501.731 + 384.141 + 381.721 = $1,731 Mil.
Total Current Assets was $2,516 Mil.
Total Assets was $12,400 Mil.
Property, Plant and Equipment(Net PPE) was $1,754 Mil.
Depreciation, Depletion and Amortization(DDA) was $109 Mil.
Selling, General & Admin. Expense(SGA) was $1,193 Mil.
Total Current Liabilities was $907 Mil.
Long-Term Debt was $7,959 Mil.
Net Income was 154.518 + 169.653 + 99.209 + 106.452 = $530 Mil.
Non Operating Income was -0.283 + 0.277 + -0.254 + -0.411 = $-1 Mil.
Cash Flow from Operations was -227.539 + -209.08 + -120.023 + -229.531 = $-786 Mil.
Accounts Receivable was $86 Mil.
Revenue was 3245.552 + 3311.057 + 2827.948 + 2602.446 = $11,987 Mil.
Gross Profit was 434.743 + 448.096 + 369.235 + 345.219 = $1,597 Mil.
Total Current Assets was $2,481 Mil.
Total Assets was $10,934 Mil.
Property, Plant and Equipment(Net PPE) was $1,535 Mil.
Depreciation, Depletion and Amortization(DDA) was $98 Mil.
Selling, General & Admin. Expense(SGA) was $1,096 Mil.
Total Current Liabilities was $730 Mil.
Long-Term Debt was $6,838 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)
=(108.859 / 13367.08) / (85.549 / 11987.003)
=0.00814381 / 0.00713681
=1.1411

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)
=(501.731 / 11987.003) / (463.339 / 13367.08)
=0.13325207 / 0.12949216
=1.029

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 - (2516.442 + 1753.992) / 12399.913) / (1 - (2481.41 + 1535.431) / 10933.774)
=0.65560774 / 0.63262081
=1.0363

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
=13367.08 / 11987.003
=1.1151

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))
=(98.001 / (98.001 + 1535.431)) / (108.517 / (108.517 + 1753.992))
=0.05999699 / 0.05826388
=1.0297

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)
=(1192.904 / 13367.08) / (1096.152 / 11987.003)
=0.08924193 / 0.09144504
=0.9759

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)
=((7958.973 + 906.927) / 12399.913) / ((6837.82 + 729.919) / 10933.774)
=0.71499695 / 0.69214335
=1.033

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
=(529.832 - -0.671 - -786.173) / 12399.913
=0.1062

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 -1.72 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

Feb05Feb06Feb07Feb08Feb09Feb10Feb11Feb12Feb13Feb14
DSRI 0.92010.84530.78150.93361.21831.22341.00110.64840.97090.7577
GMI 1.00460.97860.97110.99450.94210.94381.01471.05191.03181.0188
AQI 0.76842.69980.97141.10471.32070.646115.8510.94650.99651.0179
SGI 1.14411.191.19261.09830.85051.07121.20151.11451.09591.147
DEPI 1.28890.93091.00810.98170.93010.89950.81.25940.9731.0764
SGAI 1.021.00240.99821.00691.20860.86620.89340.960510.9769
LVGI 1.08340.9320.87721.0620.91450.70243.27111.02391.02361.0367
TATA -0.0094-0.0489-0.03760.0068-0.08630.09050.05610.05710.12250.0946
M-score -2.56-1.99-2.67-2.41-2.73-1.853.22-2.40-1.84-2.11

CarMax Inc Quarterly Data

May12Aug12Nov12Feb13May13Aug13Nov13Feb14May14Aug14
DSRI 0.71851.01941.05930.97090.94161.04060.93460.75771.22681.1411
GMI 1.05421.03831.03041.03181.02491.01681.01911.01881.01751.029
AQI 0.95620.94430.95310.99651.00531.00891.01481.01791.02611.0363
SGI 1.07511.06531.08491.09591.13871.16731.16171.1471.13171.1151
DEPI 1.27681.30491.39870.9730.98721.04151.05651.07641.07711.0297
SGAI 0.99151.02131.028310.98410.96060.95830.97690.97540.9759
LVGI 1.01991.02311.03161.02361.05061.06211.05031.03671.0331.033
TATA 0.06230.06830.09830.11490.11480.11390.11270.09460.10390.1062
M-score -2.34-2.06-1.86-1.88-1.87-1.76-1.86-2.11-1.65-1.72
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