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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 -2.13 signals that the company is 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 * 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|
|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
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)|
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)|
|=||(512.797 / 5865.76)||/||(481.355 / 7675.034)|
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 - (3263.274 + 2745.057) / 8681.488)||/||(1 - (3446.606 + 1729.916) / 7261.845)|
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))|
|=||(267.356 / (267.356 + 1729.916))||/||(329.506 / (329.506 + 2745.057))|
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)|
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)|
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|
|=||(379.372 - -7.617||-||493.101)||/||8681.488|
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.
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