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Mohawk Industries Inc (NYSE:MHK)
Beneish M-Score
-2.42 (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 -2.42 suggests that the company is not a manipulator.

MHK' s 10-Year Beneish M-Score Range
Min: -4.48   Max: 0.03
Current: -2.42

-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 * 0.906+0.528 * 0.952+0.404 * 0.9681+0.892 * 1.2157+0.115 * 0.9149
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9531+4.679 * -0.0061-0.327 * 0.9289
=-2.42

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

This Year (Jun14) TTM:Last Year (Jun13) TTM:
Accounts Receivable was $1,262 Mil.
Revenue was 2048.247 + 1813.095 + 1924.104 + 1961.536 = $7,747 Mil.
Gross Profit was 574.812 + 481.355 + 512.797 + 516.89 = $2,086 Mil.
Total Current Assets was $3,379 Mil.
Total Assets was $8,882 Mil.
Property, Plant and Equipment(Net PPE) was $2,830 Mil.
Depreciation, Depletion and Amortization(DDA) was $333 Mil.
Selling, General & Admin. Expense(SGA) was $1,406 Mil.
Total Current Liabilities was $1,873 Mil.
Long-Term Debt was $1,808 Mil.
Net Income was 152.75 + 81.081 + 94.651 + 119.068 = $448 Mil.
Non Operating Income was 1.555 + -4.89 + -2.656 + -1.168 = $-7 Mil.
Cash Flow from Operations was 168.88 + -71.006 + 198.19 + 213.059 = $509 Mil.
Accounts Receivable was $1,146 Mil.
Revenue was 1976.299 + 1486.815 + 1435.659 + 1473.493 = $6,372 Mil.
Gross Profit was 514.056 + 377.066 + 369.331 + 372.837 = $1,633 Mil.
Total Current Assets was $3,270 Mil.
Total Assets was $8,509 Mil.
Property, Plant and Equipment(Net PPE) was $2,594 Mil.
Depreciation, Depletion and Amortization(DDA) was $276 Mil.
Selling, General & Admin. Expense(SGA) was $1,213 Mil.
Total Current Liabilities was $1,345 Mil.
Long-Term Debt was $2,451 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)
=(1261.808 / 7746.982) / (1145.55 / 6372.266)
=0.16287736 / 0.17977121
=0.906

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)
=(481.355 / 6372.266) / (574.812 / 7746.982)
=0.25631228 / 0.2692473
=0.952

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 - (3379.089 + 2830.202) / 8881.681) / (1 - (3270.195 + 2594.256) / 8508.964)
=0.30088786 / 0.31079142
=0.9681

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
=7746.982 / 6372.266
=1.2157

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))
=(276.168 / (276.168 + 2594.256)) / (332.617 / (332.617 + 2830.202))
=0.09621157 / 0.10516473
=0.9149

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)
=(1405.98 / 7746.982) / (1213.436 / 6372.266)
=0.18148745 / 0.19042457
=0.9531

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)
=((1807.609 + 1872.52) / 8881.681) / ((2450.584 + 1344.962) / 8508.964)
=0.4143505 / 0.44606441
=0.9289

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
=(447.55 - -7.159 - 509.123) / 8881.681
=-0.0061

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 -2.42 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

Dec04Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13
DSRI 0.97941.14110.89790.94030.94231.23640.91611.05270.96531.232
GMI 1.01151.0590.92221.01241.09511.1040.87441.05010.97540.9849
AQI 0.94741.22670.99721.02910.71980.99391.01160.95210.9680.9747
SGI 1.17621.12581.19420.95950.89990.78290.99531.06081.02581.2697
DEPI 0.86851.55820.60430.94671.01070.91830.96711.00981.04281.3846
SGAI 0.98340.9881.06381.02151.07371.15140.92010.95390.9830.9744
LVGI 0.86771.55730.87230.79711.140.98970.91780.96170.92241.1886
TATA 0.0297-0.0249-0.0411-0.0204-0.3123-0.1069-0.0239-0.0182-0.0535-0.0197
M-score -2.19-2.35-2.65-2.59-4.20-2.94-2.70-2.43-2.73-2.15

Mohawk Industries Inc Quarterly Data

Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14
DSRI 0.96480.92751.01630.96531.02741.31011.181.2321.08750.906
GMI 1.051.03451.01350.97540.97790.98630.98080.98490.97410.952
AQI 0.94620.95860.95320.9680.86020.93690.96690.97471.07230.9681
SGI 1.07381.05681.0371.02581.02771.1181.19711.26971.30841.2157
DEPI 0.99390.96630.99751.04281.10021.57111.55061.38461.2490.9149
SGAI 0.94580.96520.98020.9830.98190.98360.97080.97440.98460.9531
LVGI 1.00051.01190.95420.92241.13951.18361.17261.18860.97670.9289
TATA -0.0189-0.0244-0.0373-0.0535-0.0446-0.0385-0.0336-0.0197-0.0122-0.0061
M-score -2.52-2.61-2.60-2.73-2.74-2.29-2.31-2.15-2.13-2.42
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