Switch to:
GuruFocus has detected 4 Warning Signs with Mohawk Industries Inc $MHK.
More than 500,000 people have already joined GuruFocus to track the stocks they follow and exchange investment ideas.
Mohawk Industries Inc (NYSE:MHK)
Beneish M-Score
-2.52 (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 -2.52 suggests that the company is not a manipulator.

MHK' s Beneish M-Score Range Over the Past 10 Years
Min: -4.48   Max: 0.03
Current: -2.52

-4.48
0.03

During the past 13 years, the highest Beneish M-Score of Mohawk Industries Inc was 0.03. The lowest was -4.48. And the median was -2.52.


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 * 1.0321+0.528 * 0.9284+0.404 * 0.9616+0.892 * 1.0934+0.115 * 1.0008
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9053+4.679 * -0.0325-0.327 * 0.8782
=-2.52

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

This Year (Sep16) TTM:Last Year (Sep15) TTM:
Accounts Receivable was $1,524 Mil.
Revenue was 2294.139 + 2310.336 + 2172.046 + 1997.997 = $8,775 Mil.
Gross Profit was 726.559 + 755.588 + 639.679 + 622.21 = $2,744 Mil.
Total Current Assets was $3,576 Mil.
Total Assets was $10,421 Mil.
Property, Plant and Equipment(Net PPE) was $3,341 Mil.
Depreciation, Depletion and Amortization(DDA) was $399 Mil.
Selling, General & Admin. Expense(SGA) was $1,520 Mil.
Total Current Liabilities was $2,983 Mil.
Long-Term Debt was $1,166 Mil.
Net Income was 269.878 + 255.188 + 171.548 + 191.559 = $888 Mil.
Non Operating Income was -3.839 + 5.807 + -3.429 + -11.525 = $-13 Mil.
Cash Flow from Operations was 435.301 + 411.62 + 137.76 + 254.921 = $1,240 Mil.
Accounts Receivable was $1,350 Mil.
Revenue was 2150.656 + 2041.733 + 1881.177 + 1951.446 = $8,025 Mil.
Gross Profit was 661.404 + 615.129 + 511.943 + 541.603 = $2,330 Mil.
Total Current Assets was $3,499 Mil.
Total Assets was $10,064 Mil.
Property, Plant and Equipment(Net PPE) was $3,046 Mil.
Depreciation, Depletion and Amortization(DDA) was $364 Mil.
Selling, General & Admin. Expense(SGA) was $1,536 Mil.
Total Current Liabilities was $3,300 Mil.
Long-Term Debt was $1,263 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)
=(1523.931 / 8774.518) / (1350.403 / 8025.012)
=0.17367689 / 0.16827427
=1.0321

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)
=(2330.079 / 8025.012) / (2744.036 / 8774.518)
=0.29035209 / 0.31272783
=0.9284

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 - (3576.314 + 3340.893) / 10420.593) / (1 - (3499.194 + 3046.491) / 10064.482)
=0.33619833 / 0.34962525
=0.9616

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
=8774.518 / 8025.012
=1.0934

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))
=(364.287 / (364.287 + 3046.491)) / (399.113 / (399.113 + 3340.893))
=0.10680466 / 0.10671453
=1.0008

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)
=(1520.123 / 8774.518) / (1535.635 / 8025.012)
=0.17324291 / 0.1913561
=0.9053

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)
=((1165.577 + 2983.32) / 10420.593) / ((1263.176 + 3299.784) / 10064.482)
=0.39814404 / 0.45337256
=0.8782

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
=(888.173 - -12.986 - 1239.602) / 10420.593
=-0.0325

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 -2.52 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 local exchange's currency.

Mohawk Industries Inc Annual Data

Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15
DSRI 0.89790.94030.94231.23640.85841.14090.96741.22640.94581.1116
GMI 0.92221.01241.09511.1040.87441.05010.97540.98490.94680.9243
AQI 0.99721.02910.71980.99391.01160.95210.9680.97470.98551.1339
SGI 1.19420.95950.89990.78290.99531.06081.02581.26971.06191.0344
DEPI 0.60430.94671.01070.91830.96711.00981.04281.38460.90511.097
SGAI 1.06381.02151.07371.15140.92010.95390.9830.97440.94691.101
LVGI 0.87230.79711.140.98970.91780.96170.92241.18860.99411.1078
TATA -0.0411-0.0204-0.3123-0.1069-0.0239-0.0182-0.0535-0.0197-0.0144-0.0281
M-score -2.65-2.59-4.20-2.94-2.75-2.35-2.73-2.15-2.58-2.51

Mohawk Industries Inc Quarterly Data

Jun14Sep14Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16
DSRI 0.84650.92970.94581.02121.14951.06661.11161.150.95581.0321
GMI 0.9520.94790.94680.95060.95170.94130.92430.91440.91150.9284
AQI 0.96810.9360.98550.96521.15811.18841.13391.17610.98780.9616
SGI 1.21571.13351.06191.02561.01521.0321.03441.06241.09741.0934
DEPI 0.91490.89160.90510.90850.99951.01261.0971.12640.97951.0008
SGAI 0.97571.00330.92440.99581.03031.02561.1010.94130.93480.9053
LVGI 0.92890.9830.99411.00281.13471.08431.10781.03490.88490.8782
TATA -0.0061-0.0044-0.0144-0.0248-0.0311-0.0407-0.0281-0.0304-0.0337-0.0325
M-score -2.48-2.51-2.57-2.60-2.49-2.57-2.51-2.39-2.60-2.52
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)
FEEDBACK