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GuruFocus has detected 3 Warning Signs with Goodyear Tire & Rubber Co $GT.
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Goodyear Tire & Rubber Co (NAS:GT)
Beneish M-Score
-2.62 (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.

Goodyear Tire & Rubber Co has a M-score of -2.62 suggests that the company is not a manipulator.

GT' s Beneish M-Score Range Over the Past 10 Years
Min: -3.27   Max: -1.49
Current: -2.62

-3.27
-1.49

During the past 13 years, the highest Beneish M-Score of Goodyear Tire & Rubber Co was -1.49. The lowest was -3.27. And the median was -2.56.


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 Goodyear Tire & Rubber Co 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 * 0.9715+0.528 * 0.9827+0.404 * 1.0524+0.892 * 0.9414+0.115 * 0.9774
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0096+4.679 * -0.0175-0.327 * 0.9649
=-2.62

* 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 $2,270 Mil.
Revenue was 3699 + 3741 + 3847 + 3879 = $15,166 Mil.
Gross Profit was 934 + 1019 + 1111 + 1066 = $4,130 Mil.
Total Current Assets was $6,325 Mil.
Total Assets was $17,194 Mil.
Property, Plant and Equipment(Net PPE) was $7,135 Mil.
Depreciation, Depletion and Amortization(DDA) was $738 Mil.
Selling, General & Admin. Expense(SGA) was $2,551 Mil.
Total Current Liabilities was $4,915 Mil.
Long-Term Debt was $5,257 Mil.
Net Income was 166 + 561 + 317 + 202 = $1,246 Mil.
Non Operating Income was 0 + 10 + 19 + -72 = $-43 Mil.
Cash Flow from Operations was -286 + 1267 + 357 + 252 = $1,590 Mil.
Accounts Receivable was $2,482 Mil.
Revenue was 3691 + 4063 + 4184 + 4172 = $16,110 Mil.
Gross Profit was 990 + 992 + 1184 + 1145 = $4,311 Mil.
Total Current Assets was $6,375 Mil.
Total Assets was $16,777 Mil.
Property, Plant and Equipment(Net PPE) was $6,940 Mil.
Depreciation, Depletion and Amortization(DDA) was $700 Mil.
Selling, General & Admin. Expense(SGA) was $2,684 Mil.
Total Current Liabilities was $4,601 Mil.
Long-Term Debt was $5,685 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)
=(2270 / 15166) / (2482 / 16110)
=0.14967691 / 0.1540658
=0.9715

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)
=(4311 / 16110) / (4130 / 15166)
=0.26759777 / 0.27231966
=0.9827

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 - (6325 + 7135) / 17194) / (1 - (6375 + 6940) / 16777)
=0.21716878 / 0.20635394
=1.0524

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
=15166 / 16110
=0.9414

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))
=(700 / (700 + 6940)) / (738 / (738 + 7135))
=0.09162304 / 0.09373809
=0.9774

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)
=(2551 / 15166) / (2684 / 16110)
=0.1682052 / 0.16660459
=1.0096

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)
=((5257 + 4915) / 17194) / ((5685 + 4601) / 16777)
=0.59160172 / 0.61310127
=0.9649

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
=(1246 - -43 - 1590) / 17194
=-0.0175

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.

Goodyear Tire & Rubber Co has a M-score of -2.62 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.

Goodyear Tire & Rubber Co Annual Data

Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15Dec16
DSRI 1.05780.81761.20640.93240.86130.97571.02070.94061.05480.9439
GMI 0.84611.10581.06720.89721.03550.95020.86550.90320.89660.9423
AQI 0.78951.01861.10610.97550.90031.09410.99642.31931.02891.0682
SGI 1.04760.99210.83651.15531.2090.9220.93080.92820.90650.9219
DEPI 1.15970.94261.06821.02630.94841.12191.00120.96710.99420.9976
SGAI 0.92780.94381.20980.86720.90281.02461.09011.09961.04471.0453
LVGI 0.79341.11880.98151.07220.98720.98941.06110.95041.00860.9518
TATA 0.03960.0549-0.1121-0.0603-0.0195-0.0292-0.00790.1344-0.0483-0.0116
M-score -2.27-2.37-2.90-2.75-2.52-2.68-2.67-1.49-2.79-2.65

Goodyear Tire & Rubber Co Quarterly Data

Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16Dec16Mar17
DSRI 0.94060.93770.95810.9611.05481.08041.08761.09480.94390.9715
GMI 0.90320.90550.90370.9040.89660.89530.92520.9570.94230.9827
AQI 2.31931.9281.84441.83041.02891.1631.18421.23621.06821.0524
SGI 0.92820.92360.90970.90110.90650.91050.91910.9250.92190.9414
DEPI 0.96710.94770.9670.9890.99421.04271.02781.03490.99760.9774
SGAI 1.09961.07331.06741.09041.04471.06961.0571.08271.04531.0096
LVGI 0.95040.84830.86680.85841.00861.02281.02421.00910.95180.9649
TATA 0.13440.06310.0550.0471-0.0483-0.036-0.0179-0.0159-0.0116-0.0175
M-score -1.49-1.95-2.02-2.07-2.79-2.66-2.53-2.47-2.65-2.62
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