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Mohawk Industries Inc (NYSE:MHK)
Beneish M-Score
-2.60 (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 -2.60 suggests that the company is not a manipulator.

MHK' s 10-Year Beneish M-Score Range
Min: -4.2   Max: -0.63
Current: -2.6

-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 -2.54.


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 * 0.9458+0.528 * 0.9468+0.404 * 0.928+0.892 * 1.0619+0.115 * 0.9051
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9314+4.679 * -0.0144-0.327 * 0.9968
=-2.60

* 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 $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 $3,132 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 $1,392 Mil.
Total Current Liabilities was $1,956 Mil.
Long-Term Debt was $1,402 Mil.
Net Income was 146.868 + 151.266 + 152.75 + 81.081 = $532 Mil.
Non Operating Income was -9.737 + 2.374 + 1.555 + -4.89 = $-11 Mil.
Cash Flow from Operations was 338.765 + 225.549 + 168.88 + -71.006 = $662 Mil.
Accounts Receivable was $1,077 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 $1,407 Mil.
Total Current Liabilities was $1,321 Mil.
Long-Term Debt was $2,133 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)
=(1081.493 / 7803.446) / (1076.824 / 7348.754)
=0.13859172 / 0.14653151
=0.9458

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)
=(556.422 / 7348.754) / (541.603 / 7803.446)
=0.26137887 / 0.2760565
=0.9468

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 - (3132.27 + 2703.21) / 8285.544) / (1 - (3085.718 + 2701.743) / 8494.177)
=0.29570346 / 0.31865547
=0.928

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
=7803.446 / 7348.754
=1.0619

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))
=(308.871 / (308.871 + 2701.743)) / (345.57 / (345.57 + 2703.21))
=0.10259402 / 0.11334698
=0.9051

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)
=(1391.898 / 7803.446) / (1407.31 / 7348.754)
=0.17836966 / 0.19150321
=0.9314

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)
=((1402.135 + 1955.814) / 8285.544) / ((2132.79 + 1320.811) / 8494.177)
=0.40527804 / 0.40658453
=0.9968

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
=(531.965 - -10.698 - 662.188) / 8285.544
=-0.0144

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 -2.60 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.

Mohawk Industries Inc Annual Data

Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14
DSRI 1.14110.89790.94030.94231.23640.91611.06910.96741.22640.9458
GMI 1.0590.92221.01241.09511.1040.87441.05010.97540.98490.9468
AQI 1.22670.99721.02910.71980.99391.01160.95210.9680.97470.928
SGI 1.12581.19420.95950.89990.78290.99531.06081.02581.26971.0619
DEPI 1.55820.60430.94671.01070.91830.96711.00981.04281.38460.9051
SGAI 0.9881.06381.02151.07371.15140.92010.95390.9830.97440.9469
LVGI 1.55730.87230.79711.140.98970.91780.96170.92241.18860.9968
TATA -0.0249-0.0411-0.0204-0.3123-0.1069-0.0239-0.0182-0.0535-0.0197-0.0144
M-score -2.35-2.65-2.59-4.20-2.94-2.70-2.42-2.73-2.15-2.60

Mohawk Industries Inc Quarterly Data

Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14Dec14
DSRI 1.03480.96741.03521.30981.21161.22641.05990.84650.92970.9458
GMI 1.01350.97540.97790.98630.98080.98490.97410.9520.94790.9468
AQI 0.95320.9680.86020.93690.96690.97471.07230.96810.9360.928
SGI 1.0371.02581.02771.1181.19711.26971.30841.21571.13351.0619
DEPI 0.99751.04281.10021.57111.55061.38461.2490.91490.89160.9051
SGAI 0.98020.9830.98190.98360.96340.99811.00750.97570.99860.9314
LVGI 0.95420.92241.13951.18361.17261.18860.97670.92890.9830.9968
TATA -0.0373-0.0535-0.0446-0.0385-0.0336-0.0197-0.0122-0.0061-0.0044-0.0144
M-score -2.58-2.73-2.73-2.29-2.28-2.16-2.16-2.48-2.51-2.60
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