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LKQ Corp (NAS:LKQ)
Beneish M-Score
-2.09 (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 -2.09 signals that the company is a manipulator.

LKQ' s 10-Year Beneish M-Score Range
Min: -2.88   Max: -1.48
Current: -2.09

-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 -2.23.


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 * 1.1509+0.528 * 1.0268+0.404 * 0.9893+0.892 * 1.3127+0.115 * 0.8891
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.961+4.679 * -0.002-0.327 * 1.0786
=-2.09

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

This Year (Jun14) TTM:Last Year (Jun13) TTM:
Accounts Receivable was $624 Mil.
Revenue was 1709.132 + 1625.777 + 1316.689 + 1298.094 = $5,950 Mil.
Gross Profit was 671.059 + 651.884 + 545.673 + 517.907 = $2,387 Mil.
Total Current Assets was $2,241 Mil.
Total Assets was $5,499 Mil.
Property, Plant and Equipment(Net PPE) was $622 Mil.
Depreciation, Depletion and Amortization(DDA) was $106 Mil.
Selling, General & Admin. Expense(SGA) was $1,667 Mil.
Total Current Liabilities was $750 Mil.
Long-Term Debt was $1,880 Mil.
Net Income was 104.882 + 104.653 + 77.864 + 73.445 = $361 Mil.
Non Operating Income was 1.697 + 0.994 + -2.476 + 0.85 = $1 Mil.
Cash Flow from Operations was 55.195 + 97.009 + 87.127 + 131.439 = $371 Mil.
Accounts Receivable was $413 Mil.
Revenue was 1251.748 + 1195.997 + 1067.915 + 1016.707 = $4,532 Mil.
Gross Profit was 509.873 + 501.949 + 445.121 + 409.705 = $1,867 Mil.
Total Current Assets was $1,658 Mil.
Total Assets was $4,218 Mil.
Property, Plant and Equipment(Net PPE) was $515 Mil.
Depreciation, Depletion and Amortization(DDA) was $76 Mil.
Selling, General & Admin. Expense(SGA) was $1,322 Mil.
Total Current Liabilities was $559 Mil.
Long-Term Debt was $1,312 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)
=(624.3 / 5949.692) / (413.215 / 4532.367)
=0.1049298 / 0.0911698
=1.1509

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)
=(651.884 / 4532.367) / (671.059 / 5949.692)
=0.41184838 / 0.40111707
=1.0268

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 - (2240.726 + 621.6) / 5498.845) / (1 - (1658.49 + 515.353) / 4218.315)
=0.47946778 / 0.48466556
=0.9893

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
=5949.692 / 4532.367
=1.3127

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))
=(76.43 / (76.43 + 515.353)) / (105.645 / (105.645 + 621.6))
=0.12915207 / 0.14526741
=0.8891

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)
=(1667.094 / 5949.692) / (1321.531 / 4532.367)
=0.28019837 / 0.29157634
=0.961

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)
=((1879.837 + 750.208) / 5498.845) / ((1311.519 + 559.11) / 4218.315)
=0.47829044 / 0.44345408
=1.0786

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
=(360.844 - 1.065 - 370.77) / 5498.845
=-0.002

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 -2.09 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

Dec04Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13
DSRI 0.96961.08290.86471.7860.69530.96061.03931.11380.87771.1965
GMI 1.00750.98861.0391.00921.01510.97591.02331.041.0181.0201
AQI 1.22081.13731.03391.21330.97270.95960.96741.03280.9750.9703
SGI 1.29511.28871.44211.42751.69371.0731.2061.32391.26091.2279
DEPI 1.24651.09260.93321.1330.661.00071.04420.97590.91630.9101
SGAI 0.98440.97640.94970.95370.98791.0050.95140.97090.99390.9712
LVGI 2.3380.77191.27631.75090.88030.90.89231.23050.99591.0428
TATA -0.0201-0.0166-0.01680.0059-0.0183-0.02040.00430.00080.0152-0.0246
M-score -2.65-2.09-2.34-1.48-2.23-2.54-2.19-2.12-2.30-2.23

LKQ Corp Quarterly Data

Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14
DSRI 1.05310.98310.98230.87770.9441.10831.20621.19651.261.1509
GMI 1.02211.01291.02481.0181.02561.02981.01951.02011.0241.0268
AQI 1.02981.04391.03250.9750.96870.96030.98670.97030.98460.9893
SGI 1.32491.33021.32961.26091.21971.20481.20511.22791.28111.3127
DEPI 0.93620.91630.90220.91630.93140.9650.98990.91010.93320.8891
SGAI 0.98920.98890.99420.99390.98890.9860.97840.97120.96560.961
LVGI 1.26041.29231.2010.99590.99551.08551.09071.04281.18311.0786
TATA -0.00450.00510.00540.01520.018-0.0026-0.0144-0.0246-0.0161-0.002
M-score -2.23-2.26-2.23-2.30-2.25-2.24-2.20-2.23-2.12-2.09
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