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GuruFocus has detected 4 Warning Signs with Garmin Ltd $GRMN.
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Garmin Ltd (NAS:GRMN)
Beneish M-Score
-2.44 (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.

Garmin Ltd has a M-score of -2.44 suggests that the company is not a manipulator.

GRMN' s Beneish M-Score Range Over the Past 10 Years
Min: -3.31   Max: -1.19
Current: -2.44

-3.31
-1.19

During the past 13 years, the highest Beneish M-Score of Garmin Ltd was -1.19. The lowest was -3.31. And the median was -2.45.


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 Garmin Ltd 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 * 0.9034+0.528 * 0.951+0.404 * 1.015+0.892 * 1.061+0.115 * 1.015
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9926+4.679 * 0.0054-0.327 * 0.8048
=-2.44

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

This Year (Mar17) TTM:Last Year (Mar16) TTM:
Accounts Receivable was $391 Mil.
Revenue was 638.546 + 860.767 + 722.25 + 811.609 = $3,033 Mil.
Gross Profit was 372.123 + 470.782 + 405.98 + 462.958 = $1,712 Mil.
Total Current Assets was $2,157 Mil.
Total Assets was $4,601 Mil.
Property, Plant and Equipment(Net PPE) was $504 Mil.
Depreciation, Depletion and Amortization(DDA) was $88 Mil.
Selling, General & Admin. Expense(SGA) was $593 Mil.
Total Current Liabilities was $571 Mil.
Long-Term Debt was $0 Mil.
Net Income was 237.812 + 136.605 + 125.054 + 161.064 = $661 Mil.
Non Operating Income was -37.097 + -0.556 + -18.077 + -5.328 = $-61 Mil.
Cash Flow from Operations was 120.395 + 213.316 + 212.994 + 149.985 = $697 Mil.
Accounts Receivable was $408 Mil.
Revenue was 624.04 + 781.357 + 679.69 + 773.83 = $2,859 Mil.
Gross Profit was 339.85 + 413.143 + 362.19 + 419.25 = $1,534 Mil.
Total Current Assets was $2,129 Mil.
Total Assets was $4,410 Mil.
Property, Plant and Equipment(Net PPE) was $449 Mil.
Depreciation, Depletion and Amortization(DDA) was $80 Mil.
Selling, General & Admin. Expense(SGA) was $564 Mil.
Total Current Liabilities was $681 Mil.
Long-Term Debt was $0 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)
=(391.345 / 3033.172) / (408.283 / 2858.917)
=0.1290217 / 0.14281037
=0.9034

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)
=(1534.433 / 2858.917) / (1711.843 / 3033.172)
=0.53671827 / 0.56437386
=0.951

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 - (2156.91 + 503.84) / 4600.681) / (1 - (2129.133 + 448.967) / 4410.324)
=0.42166171 / 0.41543977
=1.015

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
=3033.172 / 2858.917
=1.061

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))
=(79.689 / (79.689 + 448.967)) / (87.875 / (87.875 + 503.84))
=0.15073885 / 0.148509
=1.015

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)
=(593.434 / 3033.172) / (563.502 / 2858.917)
=0.19564799 / 0.19710331
=0.9926

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)
=((0 + 571.459) / 4600.681) / ((0 + 680.72) / 4410.324)
=0.12421183 / 0.15434694
=0.8048

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
=(660.535 - -61.058 - 696.69) / 4600.681
=0.0054

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.

Garmin Ltd has a M-score of -2.44 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 local exchange's currency.

Garmin Ltd Annual Data

Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15Dec16
DSRI 1.31670.70841.39830.93640.79271.00950.9650.92590.94880.9265
GMI 1.08111.03480.90720.97921.03150.91610.99060.95671.02440.9806
AQI 0.70640.96861.50451.0291.24251.17480.98540.97421.09720.9603
SGI 1.79271.09870.84330.91291.02550.98450.96911.09070.98241.0703
DEPI 1.030.97590.83470.99030.98051.02161.13291.05281.01490.985
SGAI 1.0311.11431.02541.12851.09641.06240.95031.01531.10310.9769
LVGI 1.36760.67031.09720.93621.14440.98270.98361.18660.87420.8987
TATA 0.0437-0.05-0.1018-0.0258-0.0669-0.0265-0.0127-0.03320.0417-0.037
M-score -1.47-2.80-2.63-2.74-2.91-2.59-2.58-2.71-2.27-2.65

Garmin Ltd Quarterly Data

Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16Dec16Mar17
DSRI 0.92590.930.97340.89750.94880.96391.00671.03280.92650.9034
GMI 0.95670.96770.99241.0131.02441.04921.01890.99240.98060.951
AQI 0.97420.86650.99981.00621.09721.17461.0751.05180.96031.015
SGI 1.09071.07071.03781.00540.98240.99521.00971.03411.07031.061
DEPI 1.05281.02541.01880.951.01491.00070.96681.00070.9851.015
SGAI 1.01531.04561.08881.11331.10311.06681.02890.98980.97690.9926
LVGI 1.18661.23331.06360.84730.87420.85081.02650.98280.89870.8048
TATA -0.0332-0.03580.0080.05950.04170.0276-0.0216-0.0254-0.0370.0054
M-score -2.71-2.80-2.47-2.26-2.27-2.25-2.54-2.51-2.65-2.44
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