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LKQ Corp (NAS:LKQ)
Beneish M-Score
-2.22 (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 -2.22 suggests that the company is not a manipulator.

LKQ' s 10-Year Beneish M-Score Range
Min: -2.88   Max: -1.48
Current: -2.22

-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 * 1.0491+0.528 * 1.0321+0.404 * 0.9428+0.892 * 1.3238+0.115 * 0.8295
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9607+4.679 * -0.0056-0.327 * 1.0806
=-2.22

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

This Year (Sep14) TTM:Last Year (Sep13) TTM:
Accounts Receivable was $609 Mil.
Revenue was 1721.024 + 1709.132 + 1625.777 + 1316.689 = $6,373 Mil.
Gross Profit was 664.411 + 671.059 + 651.884 + 545.673 = $2,533 Mil.
Total Current Assets was $2,346 Mil.
Total Assets was $5,535 Mil.
Property, Plant and Equipment(Net PPE) was $612 Mil.
Depreciation, Depletion and Amortization(DDA) was $115 Mil.
Selling, General & Admin. Expense(SGA) was $1,770 Mil.
Total Current Liabilities was $771 Mil.
Long-Term Debt was $1,825 Mil.
Net Income was 91.515 + 104.882 + 104.653 + 77.864 = $379 Mil.
Non Operating Income was 0.006 + 1.697 + 0.994 + -2.476 = $0 Mil.
Cash Flow from Operations was 170.438 + 55.195 + 97.009 + 87.127 = $410 Mil.
Accounts Receivable was $439 Mil.
Revenue was 1298.094 + 1251.748 + 1195.997 + 1067.915 = $4,814 Mil.
Gross Profit was 517.907 + 509.873 + 501.949 + 445.121 = $1,975 Mil.
Total Current Assets was $1,676 Mil.
Total Assets was $4,361 Mil.
Property, Plant and Equipment(Net PPE) was $532 Mil.
Depreciation, Depletion and Amortization(DDA) was $80 Mil.
Selling, General & Admin. Expense(SGA) was $1,392 Mil.
Total Current Liabilities was $643 Mil.
Long-Term Debt was $1,251 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)
=(609.434 / 6372.622) / (438.8 / 4813.754)
=0.09563316 / 0.09115547
=1.0491

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)
=(671.059 / 4813.754) / (664.411 / 6372.622)
=0.41025154 / 0.39748584
=1.0321

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 - (2345.538 + 612.292) / 5534.578) / (1 - (1675.651 + 531.897) / 4361.059)
=0.46557262 / 0.4938046
=0.9428

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
=6372.622 / 4813.754
=1.3238

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))
=(80.459 / (80.459 + 531.897)) / (115.242 / (115.242 + 612.292))
=0.13139252 / 0.15840084
=0.8295

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)
=(1769.737 / 6372.622) / (1391.579 / 4813.754)
=0.27770939 / 0.28908395
=0.9607

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)
=((1825.133 + 771.388) / 5534.578) / ((1250.932 + 642.513) / 4361.059)
=0.46914525 / 0.43417092
=1.0806

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
=(378.914 - 0.221 - 409.769) / 5534.578
=-0.0056

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 -2.22 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

Dec04Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13
DSRI 0.96961.08290.86471.7860.68750.97161.03931.11380.87771.1965
GMI 1.00750.98861.0391.00921.0150.97611.02331.041.0181.0201
AQI 1.22081.13731.03391.21330.98880.94390.96741.03280.9750.9703
SGI 1.29511.28871.44211.42751.71931.05711.2061.32391.26091.2279
DEPI 1.24651.09260.93321.1330.67050.98491.04420.97590.91630.9101
SGAI 0.98440.97640.94970.95370.98591.0070.95140.97090.99390.9712
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 -2.65-2.09-2.34-1.48-2.20-2.56-2.19-2.12-2.30-2.23

LKQ Corp Quarterly Data

Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14
DSRI 0.98310.98230.87770.9441.10831.20621.19651.261.15091.0491
GMI 1.01291.02481.0181.02561.02981.01951.02011.0241.02681.0321
AQI 1.04391.03250.9750.96870.96030.98670.97030.98460.98930.9428
SGI 1.33021.32961.26091.21971.20481.20511.22791.28111.31271.3238
DEPI 0.91630.90220.91630.93140.9650.98990.91010.93320.88910.8295
SGAI 0.98890.99420.99390.98890.9860.97840.97120.96560.9610.9607
LVGI 1.29231.2010.99590.99551.08551.09071.04281.18311.07861.0806
TATA 0.00510.00540.01520.018-0.0026-0.0144-0.0246-0.0161-0.002-0.0056
M-score -2.26-2.23-2.30-2.25-2.24-2.20-2.23-2.12-2.09-2.22
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