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CarMax Inc (NYSE:KMX)
Beneish M-Score
-1.65 (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 -1.65 signals that the company is a manipulator.

KMX' s 10-Year Beneish M-Score Range
Min: -2.95   Max: 2.36
Current: -1.65

-2.95
2.36

During the past 13 years, the highest Beneish M-Score of CarMax Inc was 2.36. The lowest was -2.95. And the median was -2.26.


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 * 1.2268+0.528 * 1.0175+0.404 * 1.0261+0.892 * 1.1317+0.115 * 1.0771
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9754+4.679 * 0.1039-0.327 * 1.033
=-1.65

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

This Year (May14) TTM:Last Year (May13) TTM:
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.
Net Income was 169.653 + 99.209 + 106.452 + 140.274 = $516 Mil.
Non Operating Income was 0.277 + -0.254 + -0.411 + -1.073 = $-1 Mil.
Cash Flow from Operations was -209.08 + -120.023 + -229.531 + -186.03 = $-745 Mil.
Accounts Receivable was $70 Mil.
Revenue was 3311.057 + 2827.948 + 2602.446 + 2758.004 = $11,499 Mil.
Gross Profit was 448.096 + 369.235 + 345.219 + 367.993 = $1,531 Mil.
Total Current Assets was $2,455 Mil.
Total Assets was $10,450 Mil.
Property, Plant and Equipment(Net PPE) was $1,444 Mil.
Depreciation, Depletion and Amortization(DDA) was $97 Mil.
Selling, General & Admin. Expense(SGA) was $1,068 Mil.
Total Current Liabilities was $710 Mil.
Long-Term Debt was $6,493 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)
=(97.81 / 13013.438) / (70.452 / 11499.455)
=0.00751608 / 0.00612655
=1.2268

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)
=(384.141 / 11499.455) / (501.731 / 13013.438)
=0.133097 / 0.1308137
=1.0175

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 - (2636.736 + 1696.94) / 12148.96) / (1 - (2454.773 + 1444.128) / 10450.454)
=0.64328831 / 0.62691563
=1.0261

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
=13013.438 / 11499.455
=1.1317

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))
=(96.636 / (96.636 + 1444.128)) / (104.919 / (104.919 + 1696.94))
=0.06271953 / 0.0582282
=1.0771

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)
=(1178.472 / 13013.438) / (1067.62 / 11499.455)
=0.09055808 / 0.09284092
=0.9754

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)
=((7688.765 + 962.158) / 12148.96) / ((6493.207 + 710.234) / 10450.454)
=0.71207107 / 0.68929455
=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
=(515.588 - -1.461 - -744.664) / 12148.96
=0.1039

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 -1.65 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 0.90780.81570.98161.13531.46181.46830.14590.64840.97090.7577
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 -2.57-2.02-2.49-2.22-2.51-1.632.44-2.40-1.84-2.11

CarMax Inc Quarterly Data

Feb12May12Aug12Nov12Feb13May13Aug13Nov13Feb14May14
DSRI 0.64840.71851.01941.05930.97090.94161.04060.93460.75771.2268
GMI 1.05191.05421.03831.03041.03181.02491.01681.01911.01881.0175
AQI 0.94650.95620.94430.95310.99651.00531.00891.01481.01791.0261
SGI 1.11451.07511.06531.08491.09591.13871.16731.16171.1471.1317
DEPI 1.25941.27681.30491.39870.9730.98721.04151.05651.07641.0771
SGAI 0.96050.99151.02131.028310.98410.96060.95830.97690.9754
LVGI 1.02391.01991.02311.03161.02361.05061.06211.05031.03671.033
TATA 0.05710.06230.06830.09830.11490.11480.11390.11270.09460.1039
M-score -2.40-2.34-2.06-1.86-1.88-1.87-1.76-1.86-2.11-1.65
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