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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 * 0.9558||+||0.528 * 0.9115||+||0.404 * 0.9878||+||0.892 * 1.0974||+||0.115 * 0.9795|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9348||+||4.679 * -0.0337||-||0.327 * 0.8849|
* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.
|This Year (Jun16) TTM:||Last Year (Jun15) TTM:|
|Accounts Receivable was $1,466 Mil.|
Revenue was 2310.336 + 2172.046 + 1997.997 + 2150.656 = $8,631 Mil.
Gross Profit was 755.588 + 639.679 + 622.21 + 661.404 = $2,679 Mil.
Total Current Assets was $3,519 Mil.
Total Assets was $10,313 Mil.
Property, Plant and Equipment(Net PPE) was $3,244 Mil.
Depreciation, Depletion and Amortization(DDA) was $390 Mil.
Selling, General & Admin. Expense(SGA) was $1,545 Mil.
Total Current Liabilities was $3,130 Mil.
Long-Term Debt was $1,161 Mil.
Net Income was 255.188 + 171.548 + 191.559 + 214.905 = $833 Mil.
Non Operating Income was 5.807 + -3.429 + -11.525 + -4.249 = $-13 Mil.
Cash Flow from Operations was 411.62 + 137.76 + 254.921 + 389.433 = $1,194 Mil.
|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 $1,506 Mil.
Total Current Liabilities was $3,002 Mil.
Long-Term Debt was $1,778 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)|
|=||(1466.004 / 8631.035)||/||(1397.615 / 7865.014)|
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)|
|=||(2225.097 / 7865.014)||/||(2678.881 / 8631.035)|
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 - (3519.203 + 3243.838) / 10312.831)||/||(1 - (3608.622 + 3014.751) / 10165.67)|
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))|
|=||(354.499 / (354.499 + 3014.751))||/||(390.388 / (390.388 + 3243.838))|
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)|
|=||(1544.541 / 8631.035)||/||(1505.694 / 7865.014)|
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)|
|=||((1160.7 + 3129.734) / 10312.831)||/||((1777.828 + 3001.531) / 10165.67)|
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|
|=||(833.2 - -13.396||-||1193.734)||/||10312.831|
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 -2.60 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