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LKQ Corp (NAS:LKQ)
Beneish M-Score
-2.48 (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 -2.48 suggests that the company is not a manipulator.

LKQ' s 10-Year Beneish M-Score Range
Min: -2.88   Max: -1.48
Current: -2.48

-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 * 0.8845+0.528 * 1.0226+0.404 * 0.9668+0.892 * 1.1794+0.115 * 0.8815
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9799+4.679 * -0.0176-0.327 * 0.8826
=-2.48

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

This Year (Jun15) TTM:Last Year (Jun14) TTM:
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.
Net Income was 119.722 + 107.095 + 80.469 + 91.515 = $399 Mil.
Non Operating Income was -0.097 + -1.919 + -1.17 + 0.006 = $-3 Mil.
Cash Flow from Operations was 102.554 + 180.145 + 48.255 + 170.438 = $501 Mil.
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.



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)
=(651.271 / 7017.137) / (624.3 / 5949.692)
=0.0928115 / 0.1049298
=0.8845

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)
=(699.479 / 5949.692) / (723.944 / 7017.137)
=0.40111707 / 0.39223874
=1.0226

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 - (2372.621 + 650.053) / 5634.542) / (1 - (2240.726 + 621.6) / 5498.845)
=0.46354575 / 0.47946778
=0.9668

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
=7017.137 / 5949.692
=1.1794

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))
=(105.645 / (105.645 + 621.6)) / (128.258 / (128.258 + 650.053))
=0.14526741 / 0.16479017
=0.8815

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)
=(1926.693 / 7017.137) / (1667.094 / 5949.692)
=0.27456967 / 0.28019837
=0.9799

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)
=((1652.064 + 726.365) / 5634.542) / ((1879.837 + 750.208) / 5498.845)
=0.42211576 / 0.47829044
=0.8826

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
=(398.801 - -3.18 - 501.392) / 5634.542
=-0.0176

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 -2.48 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

Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14
DSRI 1.08290.86471.7860.69530.96061.03931.11380.87771.19650.9861
GMI 0.98861.0391.00921.01510.97591.02331.041.0181.02011.0419
AQI 1.13731.03391.21330.97270.95960.96741.03280.9750.97030.9801
SGI 1.28871.44211.42751.69371.0731.2061.32391.26091.22791.3314
DEPI 1.09260.93321.1330.661.00071.04420.97590.91630.91010.8225
SGAI 0.97640.94970.95370.98791.0050.95140.97090.99390.97120.9642
LVGI 0.77191.27631.75090.88030.90.89231.23050.99591.04281.0652
TATA -0.0166-0.01680.0059-0.0183-0.02040.00430.00080.0152-0.02460.0016
M-score -2.09-2.34-1.48-2.23-2.54-2.19-2.12-2.30-2.23-2.21

LKQ Corp Quarterly Data

Mar13Jun13Sep13Dec13Mar14Jun14Sep14Dec14Mar15Jun15
DSRI 0.9441.10831.20621.19651.261.15091.04910.98610.8910.8845
GMI 1.02561.02981.01951.02011.0241.02681.03211.04191.03391.0226
AQI 0.96870.96030.98670.97030.98460.98930.94280.98010.95880.9668
SGI 1.21971.20481.20511.22791.28111.31271.32381.33141.25421.1794
DEPI 0.93140.9650.98990.91010.93320.88910.82950.82250.80820.8815
SGAI 0.98890.9860.97840.97120.96560.9610.96070.96420.96860.9799
LVGI 0.99551.08551.09071.04281.18311.07861.08061.06520.93310.8826
TATA 0.018-0.0026-0.0144-0.0246-0.0161-0.002-0.00560.0016-0.0124-0.0176
M-score -2.25-2.24-2.20-2.23-2.12-2.09-2.22-2.21-2.41-2.48
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