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Mohawk Industries Inc (NYSE:MHK)
Beneish M-Score
-2.57 (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 -2.57 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: -2.57

-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 * 1.0666+0.528 * 0.9413+0.404 * 1.1884+0.892 * 1.032+0.115 * 1.0126
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0256+4.679 * -0.0407-0.327 * 1.0843
=-2.57

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

This Year (Sep15) TTM:Last Year (Sep14) TTM:
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.
Net Income was 214.905 + 186.492 + 22.346 + 146.868 = $571 Mil.
Non Operating Income was -4.249 + -2.928 + 1.083 + -9.737 = $-16 Mil.
Cash Flow from Operations was 389.433 + 317.165 + -49.646 + 338.765 = $996 Mil.
Accounts Receivable was $1,227 Mil.
Revenue was 1990.658 + 2048.247 + 1813.095 + 1924.104 = $7,776 Mil.
Gross Profit was 556.422 + 574.812 + 481.355 + 512.797 = $2,125 Mil.
Total Current Assets was $3,369 Mil.
Total Assets was $8,701 Mil.
Property, Plant and Equipment(Net PPE) was $2,773 Mil.
Depreciation, Depletion and Amortization(DDA) was $336 Mil.
Selling, General & Admin. Expense(SGA) was $1,451 Mil.
Total Current Liabilities was $1,831 Mil.
Long-Term Debt was $1,807 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)
=(1350.403 / 8025.012) / (1226.818 / 7776.104)
=0.16827427 / 0.15776769
=1.0666

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)
=(615.129 / 7776.104) / (661.404 / 8025.012)
=0.27332273 / 0.29035209
=0.9413

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 - (3499.194 + 3046.491) / 10064.482) / (1 - (3368.814 + 2772.722) / 8701.46)
=0.34962525 / 0.29419477
=1.1884

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
=8025.012 / 7776.104
=1.032

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))
=(336.234 / (336.234 + 2772.722)) / (364.287 / (364.287 + 3046.491))
=0.10815013 / 0.10680466
=1.0126

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)
=(1535.635 / 8025.012) / (1450.866 / 7776.104)
=0.1913561 / 0.18658007
=1.0256

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)
=((1263.176 + 3299.784) / 10064.482) / ((1806.821 + 1831.357) / 8701.46)
=0.45337256 / 0.41811121
=1.0843

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
=(570.611 - -15.831 - 995.717) / 10064.482
=-0.0407

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 -2.57 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

Jun13Sep13Dec13Mar14Jun14Sep14Dec14Mar15Jun15Sep15
DSRI 1.30981.21161.22641.05990.84650.92970.94581.02121.14951.0666
GMI 0.98630.98080.98490.97410.9520.94790.94680.95060.95170.9413
AQI 0.93690.96690.97471.07230.96810.9360.9280.96521.15811.1884
SGI 1.1181.19711.26971.30841.21571.13351.06191.02561.01521.032
DEPI 1.57111.55061.38461.2490.91490.89160.90510.90850.99951.0126
SGAI 0.98360.96340.99811.00750.97571.00330.92440.99581.03031.0256
LVGI 1.18361.17261.18860.97670.92890.9830.99681.00281.13471.0843
TATA -0.0385-0.0336-0.0197-0.0122-0.0061-0.0044-0.0144-0.0248-0.0311-0.0407
M-score -2.29-2.28-2.16-2.16-2.48-2.51-2.60-2.60-2.49-2.57
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