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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.
Mohawk Industries Inc has a M-score of -2.42 suggests that the company is not a manipulator.
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.
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 * 0.906||+||0.528 * 0.952||+||0.404 * 0.9681||+||0.892 * 1.2157||+||0.115 * 0.9149|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9531||+||4.679 * -0.0061||-||0.327 * 0.9289|
|This Year (Jun14) TTM:||Last Year (Jun13) TTM:|
|Accounts Receivable was $1,262 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 $1,406 Mil.
Total Current Liabilities was $1,873 Mil.
Long-Term Debt was $1,808 Mil.
Net Income was 152.75 + 81.081 + 94.651 + 119.068 = $448 Mil.
Non Operating Income was 1.555 + -4.89 + -2.656 + -1.168 = $-7 Mil.
Cash Flow from Operations was 168.88 + -71.006 + 198.19 + 213.059 = $509 Mil.
|Accounts Receivable was $1,146 Mil.
Revenue was 1976.299 + 1486.815 + 1435.659 + 1473.493 = $6,372 Mil.
Gross Profit was 514.056 + 377.066 + 369.331 + 372.837 = $1,633 Mil.
Total Current Assets was $3,270 Mil.
Total Assets was $8,509 Mil.
Property, Plant and Equipment(Net PPE) was $2,594 Mil.
Depreciation, Depletion and Amortization(DDA) was $276 Mil.
Selling, General & Admin. Expense(SGA) was $1,213 Mil.
Total Current Liabilities was $1,345 Mil.
Long-Term Debt was $2,451 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)|
|=||(1261.808 / 7746.982)||/||(1145.55 / 6372.266)|
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)|
|=||(481.355 / 6372.266)||/||(574.812 / 7746.982)|
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 - (3379.089 + 2830.202) / 8881.681)||/||(1 - (3270.195 + 2594.256) / 8508.964)|
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))|
|=||(276.168 / (276.168 + 2594.256))||/||(332.617 / (332.617 + 2830.202))|
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)|
|=||(1405.98 / 7746.982)||/||(1213.436 / 6372.266)|
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)|
|=||((1807.609 + 1872.52) / 8881.681)||/||((2450.584 + 1344.962) / 8508.964)|
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|
|=||(447.55 - -7.159||-||509.123)||/||8881.681|
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 -2.42 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