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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 0.03. 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 * 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|
|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
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)|
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)|
|=||(511.943 / 7746.982)||/||(615.129 / 7865.014)|
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 - (3608.622 + 3014.751) / 10165.67)||/||(1 - (3379.089 + 2830.202) / 8881.681)|
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))|
|=||(332.617 / (332.617 + 2830.202))||/||(354.499 / (354.499 + 3014.751))|
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)|
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)|
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|
|=||(506.972 - -9.208||-||831.833)||/||10165.67|
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.
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