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Mohawk Industries Inc (NYSE:MHK)
Beneish M-Score
-2.13 (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 -2.13 signals that the company is a manipulator.

MHK' s 10-Year Beneish M-Score Range
Min: -4.48   Max: 0.03
Current: -2.13

-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 * 1.0875+0.528 * 0.9741+0.404 * 1.0723+0.892 * 1.3084+0.115 * 1.249
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9846+4.679 * -0.0122-0.327 * 0.9767
=-2.13

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

This Year (Mar14) TTM:Last Year (Mar13) TTM:
Accounts Receivable was $1,175 Mil.
Revenue was 1813.095 + 1924.104 + 1961.536 + 1976.299 = $7,675 Mil.
Gross Profit was 481.355 + 512.797 + 516.89 + 514.056 = $2,025 Mil.
Total Current Assets was $3,263 Mil.
Total Assets was $8,681 Mil.
Property, Plant and Equipment(Net PPE) was $2,745 Mil.
Depreciation, Depletion and Amortization(DDA) was $330 Mil.
Selling, General & Admin. Expense(SGA) was $1,434 Mil.
Total Current Liabilities was $1,844 Mil.
Long-Term Debt was $1,812 Mil.
Net Income was 81.081 + 94.651 + 119.068 + 84.572 = $379 Mil.
Non Operating Income was -4.89 + -2.656 + -1.168 + 1.097 = $-8 Mil.
Cash Flow from Operations was -71.006 + 198.19 + 213.059 + 152.858 = $493 Mil.
Accounts Receivable was $826 Mil.
Revenue was 1486.815 + 1435.659 + 1473.493 + 1469.793 = $5,866 Mil.
Gross Profit was 377.066 + 369.331 + 372.837 + 388.464 = $1,508 Mil.
Total Current Assets was $3,447 Mil.
Total Assets was $7,262 Mil.
Property, Plant and Equipment(Net PPE) was $1,730 Mil.
Depreciation, Depletion and Amortization(DDA) was $267 Mil.
Selling, General & Admin. Expense(SGA) was $1,113 Mil.
Total Current Liabilities was $878 Mil.
Long-Term Debt was $2,253 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)
=(1174.895 / 7675.034) / (825.659 / 5865.76)
=0.1530801 / 0.14075908
=1.0875

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)
=(512.797 / 5865.76) / (481.355 / 7675.034)
=0.2570337 / 0.26385525
=0.9741

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 - (3263.274 + 2745.057) / 8681.488) / (1 - (3446.606 + 1729.916) / 7261.845)
=0.30791461 / 0.2871616
=1.0723

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
=7675.034 / 5865.76
=1.3084

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))
=(267.356 / (267.356 + 1729.916)) / (329.506 / (329.506 + 2745.057))
=0.13386059 / 0.10717165
=1.249

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)
=(1434.274 / 7675.034) / (1113.324 / 5865.76)
=0.18687526 / 0.18980047
=0.9846

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)
=((1811.789 + 1843.515) / 8681.488) / ((2253.02 + 877.631) / 7261.845)
=0.42104579 / 0.43110959
=0.9767

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
=(379.372 - -7.617 - 493.101) / 8681.488
=-0.0122

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 -2.13 signals that the company is likely to 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

Dec04Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13
DSRI 0.97941.14110.89790.94030.94231.23640.91611.05270.96531.232
GMI 1.01151.0590.92221.01241.09511.1040.87441.05010.97540.9849
AQI 0.94741.22670.99721.02910.71980.99391.01160.95210.9680.9747
SGI 1.17621.12581.19420.95950.89990.78290.99531.06081.02581.2697
DEPI 0.86851.55820.60430.94671.01070.91830.96711.00981.04281.3846
SGAI 0.98340.9881.06381.02151.07371.15140.92010.95390.9830.9744
LVGI 0.86771.55730.87230.79711.140.98970.91780.96170.92241.1886
TATA 0.0297-0.0249-0.0411-0.0204-0.3123-0.1069-0.0239-0.0182-0.0535-0.0197
M-score -2.19-2.35-2.65-2.59-4.20-2.94-2.70-2.43-2.73-2.15

Mohawk Industries Inc Quarterly Data

Dec11Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14
DSRI 1.05270.96480.92751.01630.96531.02741.31011.181.2321.0875
GMI 1.05011.051.03451.01350.97540.97790.98630.98080.98490.9741
AQI 0.95210.94620.95860.95320.9680.86020.93690.96690.97471.0723
SGI 1.06081.07381.05681.0371.02581.02771.1181.19711.26971.3084
DEPI 1.00980.99390.96630.99751.04281.10021.57111.55061.38461.249
SGAI 0.95390.94580.96520.98020.9830.98190.98360.97080.97440.9846
LVGI 0.96171.00051.01190.95420.92241.13951.18361.17261.18860.9767
TATA -0.0182-0.0189-0.0244-0.0373-0.0535-0.0446-0.0385-0.0336-0.0197-0.0122
M-score -2.43-2.52-2.61-2.60-2.73-2.74-2.29-2.31-2.15-2.13
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