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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 -0.63. The lowest was -4.20. And the median was -2.54.
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 * 0.9458||+||0.528 * 0.9468||+||0.404 * 0.928||+||0.892 * 1.0619||+||0.115 * 0.9051|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9314||+||4.679 * -0.0144||-||0.327 * 0.9968|
|This Year (Dec14) TTM:||Last Year (Dec13) TTM:|
|Accounts Receivable was $1,081 Mil.|
Revenue was 1951.446 + 1990.658 + 2048.247 + 1813.095 = $7,803 Mil.
Gross Profit was 541.603 + 556.422 + 574.812 + 481.355 = $2,154 Mil.
Total Current Assets was $3,132 Mil.
Total Assets was $8,286 Mil.
Property, Plant and Equipment(Net PPE) was $2,703 Mil.
Depreciation, Depletion and Amortization(DDA) was $346 Mil.
Selling, General & Admin. Expense(SGA) was $1,392 Mil.
Total Current Liabilities was $1,956 Mil.
Long-Term Debt was $1,402 Mil.
Net Income was 146.868 + 151.266 + 152.75 + 81.081 = $532 Mil.
Non Operating Income was -9.737 + 2.374 + 1.555 + -4.89 = $-11 Mil.
Cash Flow from Operations was 338.765 + 225.549 + 168.88 + -71.006 = $662 Mil.
|Accounts Receivable was $1,077 Mil.
Revenue was 1924.104 + 1961.536 + 1976.299 + 1486.815 = $7,349 Mil.
Gross Profit was 512.797 + 516.89 + 514.056 + 377.066 = $1,921 Mil.
Total Current Assets was $3,086 Mil.
Total Assets was $8,494 Mil.
Property, Plant and Equipment(Net PPE) was $2,702 Mil.
Depreciation, Depletion and Amortization(DDA) was $309 Mil.
Selling, General & Admin. Expense(SGA) was $1,407 Mil.
Total Current Liabilities was $1,321 Mil.
Long-Term Debt was $2,133 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)|
|=||(1081.493 / 7803.446)||/||(1076.824 / 7348.754)|
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)|
|=||(556.422 / 7348.754)||/||(541.603 / 7803.446)|
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 - (3132.27 + 2703.21) / 8285.544)||/||(1 - (3085.718 + 2701.743) / 8494.177)|
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))|
|=||(308.871 / (308.871 + 2701.743))||/||(345.57 / (345.57 + 2703.21))|
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)|
|=||(1391.898 / 7803.446)||/||(1407.31 / 7348.754)|
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)|
|=||((1402.135 + 1955.814) / 8285.544)||/||((2132.79 + 1320.811) / 8494.177)|
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|
|=||(531.965 - -10.698||-||662.188)||/||8285.544|
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