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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.
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.
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 * 1.1116||+||0.528 * 0.9243||+||0.404 * 1.1355||+||0.892 * 1.0344||+||0.115 * 1.097|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.101||+||4.679 * -0.0281||-||0.327 * 1.1089|
|This Year (Dec15) TTM:||Last Year (Dec14) TTM:|
|Accounts Receivable was $1,244 Mil.|
Revenue was 1997.997 + 2150.656 + 2041.733 + 1881.177 = $8,072 Mil.
Gross Profit was 622.21 + 661.404 + 615.129 + 511.943 = $2,411 Mil.
Total Current Assets was $3,250 Mil.
Total Assets was $9,942 Mil.
Property, Plant and Equipment(Net PPE) was $3,147 Mil.
Depreciation, Depletion and Amortization(DDA) was $363 Mil.
Selling, General & Admin. Expense(SGA) was $1,573 Mil.
Total Current Liabilities was $3,259 Mil.
Long-Term Debt was $1,197 Mil.
Net Income was 191.559 + 214.905 + 186.492 + 22.346 = $615 Mil.
Non Operating Income was -11.525 + -4.249 + -2.928 + 1.083 = $-18 Mil.
Cash Flow from Operations was 254.921 + 389.433 + 317.165 + -49.646 = $912 Mil.
|Accounts Receivable was $1,081 Mil.
Revenue was 1951.446 + 1990.658 + 2048.247 + 1813.095 = $7,803 Mil.
Gross Profit was 541.603 + 556.422 + 574.812 + 481.355 = $2,154 Mil.
Total Current Assets was $2,980 Mil.
Total Assets was $8,286 Mil.
Property, Plant and Equipment(Net PPE) was $2,703 Mil.
Depreciation, Depletion and Amortization(DDA) was $346 Mil.
Selling, General & Admin. Expense(SGA) was $1,381 Mil.
Total Current Liabilities was $1,947 Mil.
Long-Term Debt was $1,402 Mil.
1. DSRI = Days Sales in Receivables Index
A large increase in DSR could be indicative of revenue inflation.
|DSRI||=||(Receivables_t / Revenue_t)||/||(Receivables_t-1 / Revenue_t-1)|
|=||(1243.533 / 8071.563)||/||(1081.493 / 7803.446)|
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.
|=||(GrossProfit_t-1 / Revenue_t-1)||/||(GrossProfit_t / Revenue_t)|
|=||(661.404 / 7803.446)||/||(622.21 / 8071.563)|
3. AQI = Asset Quality Index
AQI is the ratio of asset quality in year t to year t-1.
|AQI||=||(1 - (CurrentAssets_t + PPE_t) / TotalAssets_t)||/||(1 - (CurrentAssets_t-1 + PPE_t-1) / TotalAssets_t-1)|
|=||(1 - (3249.972 + 3147.118) / 9942.364)||/||(1 - (2980.486 + 2703.21) / 8285.544)|
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.
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))|
|=||(345.57 / (345.57 + 2703.21))||/||(362.647 / (362.647 + 3147.118))|
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)|
|=||(1573.12 / 8071.563)||/||(1381.396 / 7803.446)|
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)|
|=||((1196.928 + 3259.028) / 9942.364)||/||((1402.135 + 1946.724) / 8285.544)|
8. TATA = Total Accruals to Total Assets
Total accruals calculated as the change in working capital accounts other than cash less depreciation.
|=||(NetIncome_t - NonOperatingIncome_t||-||CashFlowsfromOperations_t)||/||TotalAssets_t|
|=||(615.302 - -17.619||-||911.873)||/||9942.364|
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 -2.51 suggests that the company will not be a manipulator.
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
Mohawk Industries Inc Annual Data
Mohawk Industries Inc Quarterly Data