Switch to:
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 10-Year Beneish M-Score Range
Min: -2.54   Max: -1.48
Current: -2.21

-2.54
-1.48

During the past 13 years, the highest Beneish M-Score of LKQ Corp was -1.48. The lowest was -2.54. 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 * 0.9861+0.528 * 1.0419+0.404 * 0.9801+0.892 * 1.3314+0.115 * 0.8225
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9642+4.679 * 0.0016-0.327 * 1.0652
=-2.21

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

This Year (Dec14) TTM:Last Year (Dec13) TTM:
Accounts Receivable was $601 Mil.
Revenue was 1684.131 + 1721.024 + 1709.132 + 1625.777 = $6,740 Mil.
Gross Profit was 664.559 + 664.411 + 671.059 + 651.884 = $2,652 Mil.
Total Current Assets was $2,317 Mil.
Total Assets was $5,573 Mil.
Property, Plant and Equipment(Net PPE) was $630 Mil.
Depreciation, Depletion and Amortization(DDA) was $125 Mil.
Selling, General & Admin. Expense(SGA) was $1,867 Mil.
Total Current Liabilities was $751 Mil.
Long-Term Debt was $1,801 Mil.
Net Income was 80.469 + 91.515 + 104.882 + 104.653 = $382 Mil.
Non Operating Income was -1.17 + 0.006 + 1.697 + 0.994 = $2 Mil.
Cash Flow from Operations was 48.255 + 170.438 + 55.195 + 97.009 = $371 Mil.
Accounts Receivable was $458 Mil.
Revenue was 1316.689 + 1298.094 + 1251.748 + 1195.997 = $5,063 Mil.
Gross Profit was 545.673 + 517.907 + 509.873 + 501.949 = $2,075 Mil.
Total Current Assets was $1,800 Mil.
Total Assets was $4,519 Mil.
Property, Plant and Equipment(Net PPE) was $547 Mil.
Depreciation, Depletion and Amortization(DDA) was $86 Mil.
Selling, General & Admin. Expense(SGA) was $1,454 Mil.
Total Current Liabilities was $678 Mil.
Long-Term Debt was $1,264 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)
=(601.422 / 6740.064) / (458.094 / 5062.528)
=0.0892309 / 0.0904872
=0.9861

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)
=(664.411 / 5062.528) / (664.559 / 6740.064)
=0.40995368 / 0.39345517
=1.0419

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 - (2317.417 + 629.987) / 5573.492) / (1 - (1799.817 + 546.651) / 4518.774)
=0.47117462 / 0.48072907
=0.9801

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
=6740.064 / 5062.528
=1.3314

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))
=(86.463 / (86.463 + 546.651)) / (125.437 / (125.437 + 629.987))
=0.13656782 / 0.16604847
=0.8225

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)
=(1866.52 / 6740.064) / (1454.08 / 5062.528)
=0.27692912 / 0.28722409
=0.9642

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)
=((1801.047 + 750.696) / 5573.492) / ((1264.246 + 677.953) / 4518.774)
=0.45783559 / 0.42980662
=1.0652

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
=(381.519 - 1.527 - 370.897) / 5573.492
=0.0016

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

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

Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14Dec14
DSRI 0.98230.87770.9441.10831.20621.19651.261.15091.04910.9861
GMI 1.02481.0181.02561.02981.01951.02011.0241.02681.03211.0419
AQI 1.03250.9750.96870.96030.98670.97030.98460.98930.94280.9801
SGI 1.32961.26091.21971.20481.20511.22791.28111.31271.32381.3314
DEPI 0.90220.91630.93140.9650.98990.91010.93320.88910.82950.8225
SGAI 0.99420.99390.98890.9860.97840.97120.96560.9610.96070.9642
LVGI 1.2010.99590.99551.08551.09071.04281.18311.07861.08061.0652
TATA 0.00540.01520.018-0.0026-0.0144-0.0246-0.0161-0.002-0.00560.0016
M-score -2.23-2.30-2.25-2.24-2.20-2.23-2.12-2.09-2.22-2.21
Get WordPress Plugins for easy affiliate links on Stock Tickers and Guru Names | Earn affiliate commissions by embedding GuruFocus Charts
GuruFocus Affiliate Program: Earn up to $400 per referral. ( Learn More)
Free 7-day Trial
FEEDBACK