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Mohawk Industries, Inc. (NYSE:MHK)
Beneish M-Score
-2.15 (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.

Mohawk Industries, Inc. has a M-score of -2.15 signals that the company is a manipulator.

MHK' s 10-Year Beneish M-Score Range
Min: -4.2   Max: -0.63
Current: -2.15

-4.2
-0.63

During the past 13 years, the highest Beneish M-Score of Mohawk Industries, Inc. was -0.63. The lowest was -4.20. And the median was -2.53.


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 Mohawk Industries, Inc. 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 * 1.232+0.528 * 0.9849+0.404 * 0.9747+0.892 * 1.2697+0.115 * 1.3846
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9744+4.679 * -0.0197-0.327 * 1.1886
=-2.15

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

This Year (Dec13) TTM:Last Year (Dec12) TTM:
Accounts Receivable was $1,063 Mil.
Revenue was 1924.104 + 1961.536 + 1976.299 + 1486.815 = $7,349 Mil.
Gross Profit was 512.797 + 516.89 + 514.056 + 377.066 = $1,921 Mil.
Total Current Assets was $3,086 Mil.
Total Assets was $8,494 Mil.
Property, Plant and Equipment(Net PPE) was $2,702 Mil.
Depreciation, Depletion and Amortization(DDA) was $309 Mil.
Selling, General & Admin. Expense(SGA) was $1,374 Mil.
Total Current Liabilities was $1,321 Mil.
Long-Term Debt was $2,133 Mil.
Net Income was 94.651 + 119.068 + 84.572 + 50.495 = $349 Mil.
Non Operating Income was -2.656 + -1.168 + 1.097 + -6.387 = $-9 Mil.
Cash Flow from Operations was 198.19 + 213.059 + 152.858 + -38.944 = $525 Mil.
Accounts Receivable was $679 Mil.
Revenue was 1435.659 + 1473.493 + 1469.793 + 1409.035 = $5,788 Mil.
Gross Profit was 369.331 + 372.837 + 388.464 + 359.426 = $1,490 Mil.
Total Current Assets was $2,550 Mil.
Total Assets was $6,304 Mil.
Property, Plant and Equipment(Net PPE) was $1,693 Mil.
Depreciation, Depletion and Amortization(DDA) was $280 Mil.
Selling, General & Admin. Expense(SGA) was $1,111 Mil.
Total Current Liabilities was $829 Mil.
Long-Term Debt was $1,328 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)
=(1062.875 / 7348.754) / (679.473 / 5787.98)
=0.14463336 / 0.11739381
=1.232

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)
=(516.89 / 5787.98) / (512.797 / 7348.754)
=0.25744007 / 0.26137887
=0.9849

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 - (3085.718 + 2701.743) / 8494.177) / (1 - (2550.046 + 1692.852) / 6303.684)
=0.31865547 / 0.32691772
=0.9747

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
=7348.754 / 5787.98
=1.2697

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))
=(280.293 / (280.293 + 1692.852)) / (308.871 / (308.871 + 2701.743))
=0.14205393 / 0.10259402
=1.3846

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)
=(1373.878 / 7348.754) / (1110.55 / 5787.98)
=0.18695387 / 0.19187178
=0.9744

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)
=((2132.79 + 1320.811) / 8494.177) / ((1327.729 + 828.649) / 6303.684)
=0.40658453 / 0.34208219
=1.1886

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
=(348.786 - -9.114 - 525.163) / 8494.177
=-0.0197

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.

Mohawk Industries, Inc. has a M-score of -2.15 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.

Mohawk Industries, Inc. Annual Data

Dec04Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13
DSRI 0.97941.14110.89790.94030.94231.23640.91611.05270.96531.232
GMI 1.01151.0590.92221.01241.09511.1040.87441.05010.97540.9849
AQI 0.94741.22670.99721.02910.71980.99391.01160.95210.9680.9747
SGI 1.17621.12581.19420.95950.89990.78290.99531.06081.02581.2697
DEPI 0.86851.55820.60430.94671.01070.91830.96711.00981.04281.3846
SGAI 0.98340.9881.06381.02151.07371.15140.92010.95390.9830.9744
LVGI 0.86771.55730.87230.79711.140.98970.91780.96170.92241.1886
TATA 0.0297-0.0249-0.0411-0.0204-0.3123-0.1069-0.0239-0.0182-0.0535-0.0197
M-score -2.19-2.35-2.65-2.59-4.20-2.94-2.70-2.43-2.73-2.15

Mohawk Industries, Inc. Quarterly Data

Sep11Dec11Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13
DSRI 1.08711.05270.96480.92751.01630.96531.02741.31011.181.232
GMI 1.00791.05011.051.03451.01350.97540.97790.98630.98080.9849
AQI 0.95240.95210.94620.95860.95320.9680.86020.93690.96690.9747
SGI 1.02261.06081.07381.05681.0371.02581.02771.1181.19711.2697
DEPI 1.02731.00980.99390.96630.99751.04281.10021.57111.55061.3846
SGAI 0.94410.95390.94580.96520.98020.9830.98190.98360.97080.9744
LVGI 0.96680.96171.00051.01190.95420.92241.13951.18361.17261.1886
TATA -0.0096-0.0182-0.0189-0.0244-0.0373-0.0535-0.0446-0.0385-0.0336-0.0197
M-score -2.42-2.43-2.52-2.61-2.60-2.73-2.74-2.29-2.31-2.15
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