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LKQ Corp (NAS:LKQ)
Beneish M-Score
-2.41 (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.

LKQ Corp has a M-score of -2.41 suggests that the company is not a manipulator.

LKQ' s 10-Year Beneish M-Score Range
Min: -2.88   Max: -1.48
Current: -2.41

-2.88
-1.48

During the past 13 years, the highest Beneish M-Score of LKQ Corp was -1.48. The lowest was -2.88. And the median was -2.22.


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 LKQ Corp 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 * 0.891+0.528 * 1.0339+0.404 * 0.9588+0.892 * 1.2542+0.115 * 0.8082
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9686+4.679 * -0.0124-0.327 * 0.9331
=-2.41

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

This Year (Mar15) TTM:Last Year (Mar14) TTM:
Accounts Receivable was $645 Mil.
Revenue was 1773.912 + 1684.131 + 1721.024 + 1709.132 = $6,888 Mil.
Gross Profit was 699.479 + 664.559 + 664.411 + 671.059 = $2,700 Mil.
Total Current Assets was $2,337 Mil.
Total Assets was $5,522 Mil.
Property, Plant and Equipment(Net PPE) was $622 Mil.
Depreciation, Depletion and Amortization(DDA) was $128 Mil.
Selling, General & Admin. Expense(SGA) was $1,896 Mil.
Total Current Liabilities was $772 Mil.
Long-Term Debt was $1,672 Mil.
Net Income was 107.095 + 80.469 + 91.515 + 104.882 = $384 Mil.
Non Operating Income was -1.919 + -1.17 + 0.006 + 1.697 = $-1 Mil.
Cash Flow from Operations was 180.145 + 48.255 + 170.438 + 55.195 = $454 Mil.
Accounts Receivable was $577 Mil.
Revenue was 1625.777 + 1316.689 + 1298.094 + 1251.748 = $5,492 Mil.
Gross Profit was 651.884 + 545.673 + 517.907 + 509.873 = $2,225 Mil.
Total Current Assets was $2,093 Mil.
Total Assets was $5,210 Mil.
Property, Plant and Equipment(Net PPE) was $594 Mil.
Depreciation, Depletion and Amortization(DDA) was $95 Mil.
Selling, General & Admin. Expense(SGA) was $1,561 Mil.
Total Current Liabilities was $776 Mil.
Long-Term Debt was $1,696 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)
=(645.037 / 6888.199) / (577.212 / 5492.308)
=0.09364378 / 0.10509462
=0.891

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)
=(664.559 / 5492.308) / (699.479 / 6888.199)
=0.40517338 / 0.39190331
=1.0339

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 - (2337.179 + 621.571) / 5522.466) / (1 - (2093.481 + 593.867) / 5209.828)
=0.46423391 / 0.48417721
=0.9588

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
=6888.199 / 5492.308
=1.2542

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))
=(95.269 / (95.269 + 593.867)) / (128.26 / (128.26 + 621.571))
=0.13824412 / 0.17105188
=0.8082

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)
=(1896.114 / 6888.199) / (1560.939 / 5492.308)
=0.27526992 / 0.28420456
=0.9686

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)
=((1672.332 + 772.314) / 5522.466) / ((1695.627 + 775.915) / 5209.828)
=0.44267289 / 0.47439992
=0.9331

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
=(383.961 - -1.386 - 454.033) / 5522.466
=-0.0124

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.

LKQ Corp has a M-score of -2.41 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.

LKQ Corp Annual Data

Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14
DSRI 1.08290.86471.7860.69530.96061.03931.11380.87771.19650.9861
GMI 0.98861.0391.00921.01510.97591.02331.041.0181.02011.0419
AQI 1.13731.03391.21330.97270.95960.96741.03280.9750.97030.9801
SGI 1.28871.44211.42751.69371.0731.2061.32391.26091.22791.3314
DEPI 1.09260.93321.1330.661.00071.04420.97590.91630.91010.8225
SGAI 0.97640.94970.95370.98791.0050.95140.97090.99390.97120.9642
LVGI 0.77191.27631.75090.88030.90.89231.23050.99591.04281.0652
TATA -0.0166-0.01680.0059-0.0183-0.02040.00430.00080.0152-0.02460.0016
M-score -2.09-2.34-1.48-2.23-2.54-2.19-2.12-2.30-2.23-2.21

LKQ Corp Quarterly Data

Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14Dec14Mar15
DSRI 0.87770.9441.10831.20621.19651.261.15091.04910.98610.891
GMI 1.0181.02561.02981.01951.02011.0241.02681.03211.04191.0339
AQI 0.9750.96870.96030.98670.97030.98460.98930.94280.98010.9588
SGI 1.26091.21971.20481.20511.22791.28111.31271.32381.33141.2542
DEPI 0.91630.93140.9650.98990.91010.93320.88910.82950.82250.8082
SGAI 0.99390.98890.9860.97840.97120.96560.9610.96070.96420.9686
LVGI 0.99590.99551.08551.09071.04281.18311.07861.08061.06520.9331
TATA 0.01520.018-0.0026-0.0144-0.0246-0.0161-0.002-0.00560.0016-0.0124
M-score -2.30-2.25-2.24-2.20-2.23-2.12-2.09-2.22-2.21-2.41
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