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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 -2.51 suggests that the company is not 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 * 0.9297||+||0.528 * 0.9479||+||0.404 * 0.936||+||0.892 * 1.1335||+||0.115 * 0.8916|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9986||+||4.679 * -0.0044||-||0.327 * 0.983|
|This Year (Sep14) TTM:||Last Year (Sep13) TTM:|
|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 $1,444 Mil.
Total Current Liabilities was $1,831 Mil.
Long-Term Debt was $1,807 Mil.
Net Income was 151.266 + 152.75 + 81.081 + 94.651 = $480 Mil.
Non Operating Income was 2.374 + 1.555 + -4.89 + -2.656 = $-4 Mil.
Cash Flow from Operations was 225.549 + 168.88 + -71.006 + 198.19 = $522 Mil.
|Accounts Receivable was $1,164 Mil.
Revenue was 1961.536 + 1976.299 + 1486.815 + 1435.659 = $6,860 Mil.
Gross Profit was 516.89 + 514.056 + 377.066 + 369.331 = $1,777 Mil.
Total Current Assets was $3,188 Mil.
Total Assets was $8,564 Mil.
Property, Plant and Equipment(Net PPE) was $2,684 Mil.
Depreciation, Depletion and Amortization(DDA) was $286 Mil.
Selling, General & Admin. Expense(SGA) was $1,276 Mil.
Total Current Liabilities was $1,385 Mil.
Long-Term Debt was $2,257 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)|
|=||(1226.818 / 7776.104)||/||(1164.172 / 6860.309)|
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)|
|=||(574.812 / 6860.309)||/||(556.422 / 7776.104)|
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 - (3368.814 + 2772.722) / 8701.46)||/||(1 - (3188.463 + 2683.984) / 8564.157)|
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))|
|=||(286.42 / (286.42 + 2683.984))||/||(336.234 / (336.234 + 2772.722))|
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)|
|=||(1444.114 / 7776.104)||/||(1275.828 / 6860.309)|
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)|
|=||((1806.821 + 1831.357) / 8701.46)||/||((2257.391 + 1385.223) / 8564.157)|
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|
|=||(479.748 - -3.617||-||521.613)||/||8701.46|
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 -2.51 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