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LKQ Corp (NAS:LKQ)
Beneish M-Score
-2.18 (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 -2.18 signals that the company is a manipulator.

LKQ' s Beneish M-Score Range Over the Past 10 Years
Min: -2.74   Max: -1.48
Current: -2.18

-2.74
-1.48

During the past 13 years, the highest Beneish M-Score of LKQ Corp was -1.48. The lowest was -2.74. And the median was -2.23.


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 * 1.3482+0.528 * 1.0087+0.404 * 1.01+0.892 * 1.1333+0.115 * 1.2697
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9905+4.679 * -0.0186-0.327 * 1.2858
=-2.18

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

This Year (Jun16) TTM:Last Year (Jun15) TTM:
Accounts Receivable was $995 Mil.
Revenue was 2450.693 + 1921.476 + 1748.919 + 1831.732 = $7,953 Mil.
Gross Profit was 921.947 + 760.437 + 697.327 + 712.779 = $3,092 Mil.
Total Current Assets was $3,298 Mil.
Total Assets was $8,186 Mil.
Property, Plant and Equipment(Net PPE) was $1,055 Mil.
Depreciation, Depletion and Amortization(DDA) was $157 Mil.
Selling, General & Admin. Expense(SGA) was $2,163 Mil.
Total Current Liabilities was $1,168 Mil.
Long-Term Debt was $3,275 Mil.
Net Income was 140.737 + 107.732 + 95.06 + 101.346 = $445 Mil.
Non Operating Income was -1.339 + -5.419 + -1.366 + 2.928 = $-5 Mil.
Cash Flow from Operations was 225.023 + 130.207 + 38.514 + 208.624 = $602 Mil.
Accounts Receivable was $651 Mil.
Revenue was 1838.07 + 1773.912 + 1684.131 + 1721.024 = $7,017 Mil.
Gross Profit was 723.944 + 699.479 + 664.559 + 664.411 = $2,752 Mil.
Total Current Assets was $2,373 Mil.
Total Assets was $5,635 Mil.
Property, Plant and Equipment(Net PPE) was $650 Mil.
Depreciation, Depletion and Amortization(DDA) was $128 Mil.
Selling, General & Admin. Expense(SGA) was $1,927 Mil.
Total Current Liabilities was $726 Mil.
Long-Term Debt was $1,652 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)
=(995.153 / 7952.82) / (651.271 / 7017.137)
=0.12513209 / 0.0928115
=1.3482

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)
=(2752.393 / 7017.137) / (3092.49 / 7952.82)
=0.39223874 / 0.38885452
=1.0087

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 - (3298.428 + 1055.046) / 8185.944) / (1 - (2372.621 + 650.053) / 5634.542)
=0.46817691 / 0.46354575
=1.01

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
=7952.82 / 7017.137
=1.1333

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))
=(128.258 / (128.258 + 650.053)) / (157.36 / (157.36 + 1055.046))
=0.16479017 / 0.12979151
=1.2697

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)
=(2162.865 / 7952.82) / (1926.693 / 7017.137)
=0.27196202 / 0.27456967
=0.9905

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)
=((3274.629 + 1168.382) / 8185.944) / ((1652.064 + 726.365) / 5634.542)
=0.54276098 / 0.42211576
=1.2858

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
=(444.875 - -5.196 - 602.368) / 8185.944
=-0.0186

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 -2.18 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.

LKQ Corp Annual Data

Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15
DSRI 0.86471.7860.69530.96061.03931.11380.87771.19650.98610.9195
GMI 1.0391.00921.01510.97591.02331.041.0181.02011.04190.9987
AQI 1.03391.21330.97270.95960.96741.03280.9750.97030.99150.9697
SGI 1.44211.42751.69371.0731.2061.32391.26091.22791.33141.0671
DEPI 0.93321.1330.661.00071.04420.97590.91630.91010.82251.0683
SGAI 0.94970.95370.98791.0050.95140.97090.99390.97120.96420.9977
LVGI 1.27631.75090.88030.90.89231.23050.99591.04281.07440.8744
TATA -0.01680.0059-0.0183-0.02040.00430.00080.0152-0.02460.0017-0.0188
M-score -2.34-1.48-2.23-2.54-2.19-2.12-2.30-2.23-2.21-2.55

LKQ Corp Quarterly Data

Mar14Jun14Sep14Dec14Mar15Jun15Sep15Dec15Mar16Jun16
DSRI 1.261.15091.04910.98610.8910.88450.91950.91951.2841.3482
GMI 1.0241.02681.03211.04191.03391.02261.01160.99870.99381.0087
AQI 0.98460.98930.94280.99150.95880.96681.00320.96971.05531.01
SGI 1.28111.31271.32381.33141.25421.17941.11851.06711.06561.1333
DEPI 0.93320.88910.82950.82250.80820.88150.9571.06831.1641.2697
SGAI 0.96560.9610.96070.96420.96860.97990.99170.99771.00860.9905
LVGI 1.18311.07861.08061.07440.93310.88260.88480.87441.16461.2858
TATA -0.0161-0.002-0.00560.0017-0.0124-0.0176-0.0229-0.0188-0.0071-0.0186
M-score -2.12-2.09-2.22-2.21-2.41-2.48-2.51-2.55-2.21-2.18
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