Hitachi Construction Machinery Co (FRA:HCM) Beneish M-Score : -2.51 (As of May. 24, 2024)

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What is Hitachi Construction Machinery Co Beneish M-Score?

The zones of discrimination for M-Score is as such:

An M-Score of equal or less than -1.78 suggests that the company is unlikely to be a manipulator.
An M-Score of greater than -1.78 signals that the company is likely to be a manipulator.

Good Sign:

Beneish M-Score -2.51 no higher than -1.78, which implies that the company is unlikely to be a manipulator.

The historical rank and industry rank for Hitachi Construction Machinery Co's Beneish M-Score or its related term are showing as below:

FRA:HCM' s Beneish M-Score Range Over the Past 10 Years
Min: -3.21 Med: -2.52 Max: -2.07
Current: -2.51

During the past 13 years, the highest Beneish M-Score of Hitachi Construction Machinery Co was -2.07. The lowest was -3.21. And the median was -2.52.

Hitachi Construction Machinery Co Beneish M-Score Historical Data

The historical data trend for Hitachi Construction Machinery Co's Beneish M-Score can be seen below:

* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD.
* For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.

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Hitachi Construction Machinery Co Beneish M-Score Chart

Hitachi Construction Machinery Co Annual Data

Trend

Mar15

Mar16

Mar17

Mar18

Mar19

Mar20

Mar21

Mar22

Mar23

Mar24

Beneish M-Score

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-2.52

-2.69

-2.23

-2.14

-2.51

Hitachi Construction Machinery Co Quarterly Data
	Jun19	Sep19	Dec19	Mar20	Jun20	Sep20	Dec20	Mar21	Jun21	Sep21	Dec21	Mar22	Jun22	Sep22	Dec22	Mar23	Jun23	Sep23	Dec23	Mar24
Beneish M-Score	Get a 7-Day Free Trial															-2.14	-1.98	-2.18	-2.36	-2.51

Competitive Comparison of Hitachi Construction Machinery Co's Beneish M-Score

For the Farm & Heavy Construction Machinery subindustry, Hitachi Construction Machinery Co's Beneish M-Score, along with its competitors' market caps and Beneish M-Score data, can be viewed below:

* Competitive companies are chosen from companies within the same industry, with headquarter located in same country, with closest market capitalization; x-axis shows the market cap, and y-axis shows the term value; the bigger the dot, the larger the market cap. Note that "N/A" values will not show up in the chart.

Hitachi Construction Machinery Co's Beneish M-Score Distribution in the Farm & Heavy Construction Machinery Industry

For the Farm & Heavy Construction Machinery industry and Industrials sector, Hitachi Construction Machinery Co's Beneish M-Score distribution charts can be found below:

* The bar in red indicates where Hitachi Construction Machinery Co's Beneish M-Score falls into.

Hitachi Construction Machinery Co Beneish M-Score Calculation

The M-score was created by Professor Messod Beneish. Instead of measuring the bankruptcy risk (Altman Z-Score) or business trend (Piotroski 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 Hitachi Construction Machinery Co for today is based on a combination of the following eight different indices:

-4.84

0.92 * DSRI

0.528 * GMI

0.404 * AQI

0.892 * SGI

0.115 * DEPI

-4.84

0.92 * 0.8875

0.528 * 0.9539

0.404 * 0.8245

0.892 * 0.9916

0.115 * 1.0021

0.172 * SGAI

4.679 * TATA

0.327 * LVGI

0.172 * 1.0039

4.679 * 0.012566

0.327 * 0.9864

-2.62

This Year (Mar24) TTM:

Last Year (Mar23) TTM:

Total Receivables was €1,877 Mil.
Revenue was 2367.625 + 2205.344 + 2244.148 + 2089.484 = €8,907 Mil.
Gross Profit was 712.046 + 695.131 + 699.614 + 650.875 = €2,758 Mil.
Total Current Assets was €6,617 Mil.
Total Assets was €11,268 Mil.
Property, Plant and Equipment(Net PPE) was €3,305 Mil.
Depreciation, Depletion and Amortization(DDA) was €432 Mil.
Selling, General, & Admin. Expense(SGA) was €1,693 Mil.
Total Current Liabilities was €4,469 Mil.
Long-Term Debt & Capital Lease Obligation was €1,485 Mil.
Net Income was 136.448 + 86.451 + 165.294 + 205.151 = €593 Mil.
Non Operating Income was 0 + 0 + 0 + 0 = €0 Mil.
Cash Flow from Operations was 272.564 + 3.184 + 257.622 + -81.619 = €452 Mil.

Total Receivables was €2,133 Mil.
Revenue was 2632.389 + 2265.953 + 2194.774 + 1889.283 = €8,982 Mil.
Gross Profit was 801.358 + 689.1 + 642.664 + 519.805 = €2,653 Mil.
Total Current Assets was €6,351 Mil.
Total Assets was €11,369 Mil.
Property, Plant and Equipment(Net PPE) was €3,371 Mil.
Depreciation, Depletion and Amortization(DDA) was €442 Mil.
Selling, General, & Admin. Expense(SGA) was €1,701 Mil.
Total Current Liabilities was €4,296 Mil.
Long-Term Debt & Capital Lease Obligation was €1,794 Mil.

1. DSRI = Days Sales in Receivables Index

Measured as the ratio of Revenue in Total 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)
	=	(1877.421 / 8906.601)	/	(2133.45 / 8982.399)
	=	0.21079	/	0.237514
	=	0.8875

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)
	=	(2652.927 / 8982.399)	/	(2757.666 / 8906.601)
	=	0.295347	/	0.30962
	=	0.9539

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 Property, Plant and Equipment to Total Assets.

AQI	=	(1 - (CurrentAssets_t + PPE_t) / TotalAssets_t)	/	(1 - (CurrentAssets_t-1 + PPE_t-1) / TotalAssets_t-1)
	=	(1 - (6616.975 + 3305.325) / 11268.324)	/	(1 - (6351.114 + 3370.719) / 11368.935)
	=	0.119452	/	0.144877
	=	0.8245

4. SGI = Sales Growth Index

Ratio of Revenue 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
	=	8906.601	/	8982.399
	=	0.9916

5. DEPI = Depreciation Index

Measured as the ratio of the rate of Depreciation, Depletion and Amortization 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))
	=	(441.644 / (441.644 + 3370.719))	/	(432.074 / (432.074 + 3305.325))
	=	0.115845	/	0.115608
	=	1.0021

Note: If the Depreciation, Depletion and Amortization data is not available, we assume that the depreciation rate is constant and set the Depreciation Index to 1.

6. SGAI = Sales, General and Administrative expenses Index

The ratio of Selling, General, & Admin. Expense(SGA) to Sales 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)
	=	(1693.187 / 8906.601)	/	(1700.915 / 8982.399)
	=	0.190105	/	0.189361
	=	1.0039

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 in leverage

LVGI	=	((LTD_t + CurrentLiabilities_t) / TotalAssets_t)	/	((LTD_t-1 + CurrentLiabilities_t-1) / TotalAssets_t-1)
	=	((1484.903 + 4468.925) / 11268.324)	/	((1793.535 + 4296.499) / 11368.935)
	=	0.528369	/	0.535673
	=	0.9864

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
	=	(593.344 - 0	-	451.751)	/	11268.324
	=	0.012566

An M-Score of equal or less than -1.78 suggests that the company is unlikely to be a manipulator. An M-Score of greater than -1.78 signals that the company is likely to be a manipulator.

Hitachi Construction Machinery Co has a M-score of -2.62 suggests that the company is unlikely to be a manipulator.

Hitachi Construction Machinery Co Beneish M-Score Related Terms

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Hitachi Construction Machinery Co (FRA:HCM) Business Description

Industry

GURUFOCUS.COM » STOCK LIST » Industrials » Farm & Heavy Construction Machinery » Hitachi Construction Machinery Co Ltd (FRA:HCM) » Definitions » Beneish M-Score

Comparable Companies

Traded in Other Exchanges

HTCMY:USA 6305:Japan

Address

16-1, Higashiueno 2-chome, Taito-ku, Tokyo, JPN, 110-0015

Website

https://www.hitachicm.com

Hitachi Construction Machinery, or HCM, manufactures and sells construction and mining machinery, and provides related services such as parts supply, rentals, and others. HCM was established in 1970 as a subsidiary of Hitachi, but its origins date back to 1949 when it introduced Japan's first mechanical excavator. The company's main products include hydraulic excavators for mining/construction, rigid dump trucks, and wheel loaders. As of August 2022, Hitachi is no longer the parent company of HCM, after selling 26% of its stake to HCJI Holdings, a joint venture between Itochu and Japan Industrial Partners. Currently, Hitachi has a 25.4% stake in Hitachi Construction Machinery as an equity-method affiliate. HCM is based in Tokyo, Japan.