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CarMax Inc (NYSE:KMX)
Beneish M-Score
-2.25 (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 -2.25 suggests that the company is not a manipulator.

KMX' s Beneish M-Score Range Over the Past 10 Years
Min: -2.91   Max: 3.15
Current: -2.25

-2.91
3.15

During the past 13 years, the highest Beneish M-Score of CarMax Inc was 3.15. The lowest was -2.91. And the median was -2.40.


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 * 0.9927+0.404 * 1.0264+0.892 * 1.0617+0.115 * 0.9747
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.8391+4.679 * 0.0542-0.327 * 1.0536
=-2.25

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

This Year (Feb16) TTM:Last Year (Feb15) TTM:
Accounts Receivable was $132 Mil.
Revenue was 3705.805 + 3544.069 + 3884.913 + 4014.888 = $15,150 Mil.
Gross Profit was 489.265 + 464.331 + 521.37 + 543.794 = $2,019 Mil.
Total Current Assets was $2,472 Mil.
Total Assets was $14,482 Mil.
Property, Plant and Equipment(Net PPE) was $2,162 Mil.
Depreciation, Depletion and Amortization(DDA) was $137 Mil.
Selling, General & Admin. Expense(SGA) was $1,121 Mil.
Total Current Liabilities was $1,005 Mil.
Long-Term Debt was $10,342 Mil.
Net Income was 141.027 + 128.199 + 172.228 + 181.974 = $623 Mil.
Non Operating Income was -9.768 + -1.157 + -1.593 + -0.041 = $-13 Mil.
Cash Flow from Operations was 232.686 + -296.835 + -202.298 + 117.554 = $-149 Mil.
Accounts Receivable was $138 Mil.
Revenue was 3514.092 + 3405.234 + 3599.194 + 3750.196 = $14,269 Mil.
Gross Profit was 475.837 + 446.62 + 463.339 + 501.731 = $1,888 Mil.
Total Current Assets was $2,591 Mil.
Total Assets was $13,198 Mil.
Property, Plant and Equipment(Net PPE) was $1,863 Mil.
Depreciation, Depletion and Amortization(DDA) was $115 Mil.
Selling, General & Admin. Expense(SGA) was $1,258 Mil.
Total Current Liabilities was $997 Mil.
Long-Term Debt was $8,819 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)
=(132.171 / 15149.675) / (137.69 / 14268.716)
=0.00872435 / 0.00964978
=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)
=(464.331 / 14268.716) / (489.265 / 15149.675)
=0.13228429 / 0.13325434
=0.9927

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 - (2471.781 + 2161.698) / 14481.576) / (1 - (2590.938 + 1862.538) / 13198.201)
=0.68004318 / 0.66256947
=1.0264

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
=15149.675 / 14268.716
=1.0617

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))
=(115.173 / (115.173 + 1862.538)) / (137.36 / (137.36 + 2161.698))
=0.05823551 / 0.05974621
=0.9747

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)
=(1120.535 / 15149.675) / (1257.725 / 14268.716)
=0.07396429 / 0.08814563
=0.8391

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)
=((10342.323 + 1005.193) / 14481.576) / ((8818.75 + 997.173) / 13198.201)
=0.78358295 / 0.74373189
=1.0536

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
=(623.428 - -12.559 - -148.893) / 14481.576
=0.0542

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 -2.25 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 1.01010.98170.93010.89951.01020.99740.9731.07640.99720.9747
SGAI 0.99821.00691.20860.86620.92010.932610.97690.95941.0124
LVGI 0.87721.0620.91450.70243.27111.02391.02361.03671.05981.0536
TATA -0.03760.0071-0.0927-0.04810.05820.05710.12250.09460.11890.0542
M-score -2.67-2.40-2.76-2.503.25-2.42-1.84-2.11-1.33-2.28

CarMax Inc Quarterly Data

Nov13Feb14May14Aug14Nov14Feb15May15Aug15Nov15Feb16
DSRI 0.93460.75771.22681.14111.15521.51820.9490.83550.92830.9041
GMI 1.01911.01881.01751.0291.02080.99120.98530.96550.96850.9927
AQI 1.01481.01791.02611.03631.03761.04671.03571.03111.02051.0264
SGI 1.16171.1471.13171.11511.12211.13481.11681.10861.08151.0617
DEPI 1.05651.07641.07711.02971.00680.99720.97921.00120.99280.9747
SGAI 0.95830.97690.97540.97590.97210.95940.98320.82860.84280.8391
LVGI 1.05031.03671.0331.0331.06611.05981.04531.05411.0591.0536
TATA 0.11270.09460.10390.10620.11370.11890.09170.08940.08310.0542
M-score -1.86-2.11-1.65-1.72-1.69-1.33-2.00-2.11-2.09-2.25
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