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LKQ Corp (NAS:LKQ)
Beneish M-Score
-2.12 (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 -2.12 signals that the company is a manipulator.

LKQ' s 10-Year Beneish M-Score Range
Min: -2.88   Max: -1.48
Current: -2.12

-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 * 1.26+0.528 * 1.024+0.404 * 0.9846+0.892 * 1.2811+0.115 * 0.9332
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9656+4.679 * -0.0161-0.327 * 1.1831
=-2.12

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

This Year (Mar14) TTM:Last Year (Mar13) TTM:
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.
Net Income was 104.653 + 77.864 + 73.445 + 75.722 = $332 Mil.
Non Operating Income was 0.994 + -2.476 + 0.85 + -2.448 = $-3 Mil.
Cash Flow from Operations was 97.009 + 87.127 + 131.439 + 103.057 = $419 Mil.
Accounts Receivable was $358 Mil.
Revenue was 1195.997 + 1067.915 + 1016.707 + 1006.531 = $4,287 Mil.
Gross Profit was 501.949 + 445.121 + 409.705 + 421.931 = $1,779 Mil.
Total Current Assets was $1,400 Mil.
Total Assets was $3,723 Mil.
Property, Plant and Equipment(Net PPE) was $492 Mil.
Depreciation, Depletion and Amortization(DDA) was $73 Mil.
Selling, General & Admin. Expense(SGA) was $1,262 Mil.
Total Current Liabilities was $505 Mil.
Long-Term Debt was $988 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)
=(577.212 / 5492.308) / (357.58 / 4287.15)
=0.10509462 / 0.08340739
=1.26

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)
=(545.673 / 4287.15) / (651.884 / 5492.308)
=0.41489241 / 0.40517338
=1.024

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 - (2093.481 + 593.867) / 5209.828) / (1 - (1399.562 + 492.479) / 3722.699)
=0.48417721 / 0.49175558
=0.9846

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
=5492.308 / 4287.15
=1.2811

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))
=(72.948 / (72.948 + 492.479)) / (95.269 / (95.269 + 593.867))
=0.129014 / 0.13824412
=0.9332

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)
=(1560.939 / 5492.308) / (1261.867 / 4287.15)
=0.28420456 / 0.29433703
=0.9656

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)
=((1695.627 + 775.915) / 5209.828) / ((987.979 + 504.739) / 3722.699)
=0.47439992 / 0.40097736
=1.1831

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
=(331.684 - -3.08 - 418.632) / 5209.828
=-0.0161

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 -2.12 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

Dec11Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14
DSRI 1.11381.05310.98310.98230.87770.9441.10831.20621.19651.26
GMI 1.041.02211.01291.02481.0181.02561.02981.01951.02011.024
AQI 1.03281.02981.04391.03250.9750.96870.96030.98670.97030.9846
SGI 1.32391.32491.33021.32961.26091.21971.20481.20511.22791.2811
DEPI 0.97590.93620.91630.90220.91630.93140.9650.98990.91010.9332
SGAI 0.97090.98920.98890.99420.99390.98890.9860.97840.97120.9656
LVGI 1.23051.26041.29231.2010.99590.99551.08551.09071.04281.1831
TATA 0.0008-0.00450.00510.00540.01520.018-0.0026-0.0144-0.0246-0.0161
M-score -2.12-2.23-2.26-2.23-2.30-2.25-2.24-2.20-2.23-2.12
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