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Mohawk Industries Inc (NYSE:MHK)
Beneish M-Score
-2.49 (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 -2.49 suggests that the company is not a manipulator.

MHK' s 10-Year Beneish M-Score Range
Min: -4.48   Max: 0.03
Current: -2.49

-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 * 1.1495+0.528 * 0.9517+0.404 * 1.1581+0.892 * 1.0152+0.115 * 0.9995
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0375+4.679 * -0.0311-0.327 * 1.1347
=-2.49

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

This Year (Jun15) TTM:Last Year (Jun14) TTM:
Accounts Receivable was $1,398 Mil.
Revenue was 2041.733 + 1881.177 + 1951.446 + 1990.658 = $7,865 Mil.
Gross Profit was 615.129 + 511.943 + 541.603 + 556.422 = $2,225 Mil.
Total Current Assets was $3,609 Mil.
Total Assets was $10,166 Mil.
Property, Plant and Equipment(Net PPE) was $3,015 Mil.
Depreciation, Depletion and Amortization(DDA) was $354 Mil.
Selling, General & Admin. Expense(SGA) was $1,516 Mil.
Total Current Liabilities was $3,002 Mil.
Long-Term Debt was $1,778 Mil.
Net Income was 186.492 + 22.346 + 146.868 + 151.266 = $507 Mil.
Non Operating Income was -2.928 + 1.083 + -9.737 + 2.374 = $-9 Mil.
Cash Flow from Operations was 317.165 + -49.646 + 338.765 + 225.549 = $832 Mil.
Accounts Receivable was $1,198 Mil.
Revenue was 2048.247 + 1813.095 + 1924.104 + 1961.536 = $7,747 Mil.
Gross Profit was 574.812 + 481.355 + 512.797 + 516.89 = $2,086 Mil.
Total Current Assets was $3,379 Mil.
Total Assets was $8,882 Mil.
Property, Plant and Equipment(Net PPE) was $2,830 Mil.
Depreciation, Depletion and Amortization(DDA) was $333 Mil.
Selling, General & Admin. Expense(SGA) was $1,439 Mil.
Total Current Liabilities was $1,873 Mil.
Long-Term Debt was $1,808 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)
=(1397.615 / 7865.014) / (1197.627 / 7746.982)
=0.17770026 / 0.15459272
=1.1495

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)
=(511.943 / 7746.982) / (615.129 / 7865.014)
=0.2692473 / 0.28291075
=0.9517

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 - (3608.622 + 3014.751) / 10165.67) / (1 - (3379.089 + 2830.202) / 8881.681)
=0.34845682 / 0.30088786
=1.1581

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
=7865.014 / 7746.982
=1.0152

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))
=(332.617 / (332.617 + 2830.202)) / (354.499 / (354.499 + 3014.751))
=0.10516473 / 0.105216
=0.9995

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)
=(1516.196 / 7865.014) / (1439.412 / 7746.982)
=0.19277728 / 0.18580294
=1.0375

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)
=((1777.828 + 3001.531) / 10165.67) / ((1807.609 + 1872.52) / 8881.681)
=0.47014698 / 0.4143505
=1.1347

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
=(506.972 - -9.208 - 831.833) / 10165.67
=-0.0311

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 -2.49 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

Mar13Jun13Sep13Dec13Mar14Jun14Sep14Dec14Mar15Jun15
DSRI 1.03521.30981.21161.22641.05990.84650.92970.94581.02121.1495
GMI 0.97790.98630.98080.98490.97410.9520.94790.94680.95060.9517
AQI 0.86020.93690.96690.97471.07230.96810.9360.9280.96521.1581
SGI 1.02771.1181.19711.26971.30841.21571.13351.06191.02561.0152
DEPI 1.10021.57111.55061.38461.2490.91490.89160.90510.90850.9995
SGAI 0.98190.98360.96340.99811.00750.97570.99860.93141.00281.0375
LVGI 1.13951.18361.17261.18860.97670.92890.9830.99681.00281.1347
TATA -0.0446-0.0385-0.0336-0.0197-0.0122-0.0061-0.0044-0.0144-0.0248-0.0311
M-score -2.73-2.29-2.28-2.16-2.16-2.48-2.51-2.60-2.61-2.49
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