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LKQ Corp (NAS:LKQ)
Beneish M-Score
-2.21 (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 -2.21 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: -2.21

-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 * 1.284+0.528 * 0.9938+0.404 * 1.0553+0.892 * 1.0656+0.115 * 1.164
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0086+4.679 * -0.0071-0.327 * 1.1646
=-2.21

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

This Year (Mar16) TTM:Last Year (Mar15) TTM:
Accounts Receivable was $883 Mil.
Revenue was 1921.476 + 1748.919 + 1831.732 + 1838.07 = $7,340 Mil.
Gross Profit was 760.437 + 697.327 + 712.779 + 723.944 = $2,894 Mil.
Total Current Assets was $2,994 Mil.
Total Assets was $7,357 Mil.
Property, Plant and Equipment(Net PPE) was $759 Mil.
Depreciation, Depletion and Amortization(DDA) was $131 Mil.
Selling, General & Admin. Expense(SGA) was $2,038 Mil.
Total Current Liabilities was $1,049 Mil.
Long-Term Debt was $2,743 Mil.
Net Income was 107.732 + 95.06 + 101.346 + 119.722 = $424 Mil.
Non Operating Income was -5.419 + -1.366 + 2.928 + -0.097 = $-4 Mil.
Cash Flow from Operations was 130.207 + 38.514 + 208.624 + 102.554 = $480 Mil.
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.



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)
=(882.582 / 7340.197) / (645.037 / 6888.199)
=0.12023955 / 0.09364378
=1.284

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)
=(697.327 / 6888.199) / (760.437 / 7340.197)
=0.39190331 / 0.39433369
=0.9938

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 - (2993.887 + 758.641) / 7356.857) / (1 - (2337.179 + 621.571) / 5522.466)
=0.48992783 / 0.46423391
=1.0553

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
=7340.197 / 6888.199
=1.0656

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))
=(128.26 / (128.26 + 621.571)) / (130.689 / (130.689 + 758.641))
=0.17105188 / 0.1469522
=1.164

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)
=(2037.925 / 7340.197) / (1896.114 / 6888.199)
=0.27763901 / 0.27526992
=1.0086

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)
=((2743.197 + 1049.41) / 7356.857) / ((1672.332 + 772.314) / 5522.466)
=0.51552001 / 0.44267289
=1.1646

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
=(423.86 - -3.954 - 479.899) / 7356.857
=-0.0071

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 -2.21 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 0.86471.7860.6850.97511.03931.11380.87771.19650.98610.9195
GMI 1.0391.00921.0150.97611.02331.041.0181.02011.04190.9987
AQI 1.03391.21330.97270.95960.96741.03280.9750.97030.99150.9697
SGI 1.44211.42751.71931.05711.2061.32391.26091.22791.33141.0671
DEPI 0.93321.1330.661.00071.04420.97590.91630.91010.82251.0683
SGAI 0.94970.95370.98591.0070.95140.97090.99390.97120.96420.9977
LVGI 1.27631.75090.88030.90.89231.23050.99591.04281.07440.8744
TATA -0.01680.0059-0.0183-0.02040.00410.00050.0152-0.02460.0017-0.0188
M-score -2.34-1.48-2.21-2.54-2.19-2.12-2.30-2.23-2.21-2.55

LKQ Corp Quarterly Data

Dec13Mar14Jun14Sep14Dec14Mar15Jun15Sep15Dec15Mar16
DSRI 1.19651.261.15091.04910.98610.8910.88450.91950.91951.284
GMI 1.02011.0241.02681.03211.04191.03391.02261.01160.99870.9938
AQI 0.97030.98460.98930.94280.99150.95880.96681.00320.96971.0553
SGI 1.22791.28111.31271.32381.33141.25421.17941.11851.06711.0656
DEPI 0.91010.93320.88910.82950.82250.80820.88150.9571.06831.164
SGAI 0.97120.96560.9610.96070.96420.96860.97990.99170.99771.0086
LVGI 1.04281.18311.07861.08061.07440.93310.88260.88480.87441.1646
TATA -0.0246-0.0161-0.002-0.00560.0017-0.0124-0.0176-0.0229-0.0188-0.0071
M-score -2.23-2.12-2.09-2.22-2.21-2.41-2.48-2.51-2.55-2.21
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