Switch to:
GuruFocus has detected 4 Warning Signs with Honda Motor Co Ltd $HMC.
More than 500,000 people have already joined GuruFocus to track the stocks they follow and exchange investment ideas.
Honda Motor Co Ltd (NYSE:HMC)
Beneish M-Score
-3.00 (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.

Honda Motor Co Ltd has a M-score of -2.95 suggests that the company is not a manipulator.

HMC' s Beneish M-Score Range Over the Past 10 Years
Min: -3.13   Max: -1.42
Current: -3

-3.13
-1.42

During the past 13 years, the highest Beneish M-Score of Honda Motor Co Ltd was -1.42. The lowest was -3.13. And the median was -2.62.


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 Honda Motor Co 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 * 0.264+0.528 * 0.9996+0.404 * 1.7115+0.892 * 1.0516+0.115 * 0.468
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.7863+4.679 * -0.0225-0.327 * 0.987
=-2.95

* 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 $6,766 Mil.
Revenue was 33329.3539917 + 30182.1150519 + 32057.6749066 + 32953.9662215 = $128,523 Mil.
Gross Profit was 7393.47216749 + 6589.24585834 + 7271.22945287 + 7537.38221505 = $28,791 Mil.
Total Current Assets was $58,056 Mil.
Total Assets was $167,895 Mil.
Property, Plant and Equipment(Net PPE) was $28,343 Mil.
Depreciation, Depletion and Amortization(DDA) was $6,196 Mil.
Selling, General & Admin. Expense(SGA) was $14,694 Mil.
Total Current Liabilities was $48,078 Mil.
Long-Term Debt was $35,621 Mil.
Net Income was 849.822656565 + 1455.32556137 + 1739.91470197 + 1658.25825883 = $5,703 Mil.
Non Operating Income was 383.717171538 + 409.592915746 + 375.460655523 + 164.222612242 = $1,333 Mil.
Cash Flow from Operations was 3779.7576085 + 570.104165499 + 2168.89048704 + 1626.81097171 = $8,146 Mil.
Accounts Receivable was $24,375 Mil.
Revenue was 32390.2766008 + 29738.3401159 + 30140.2358432 + 29945.0688902 = $122,214 Mil.
Gross Profit was 7344.67824358 + 6804.10243762 + 6596.65278374 + 6620.7991361 = $27,366 Mil.
Total Current Assets was $55,269 Mil.
Total Assets was $161,419 Mil.
Property, Plant and Equipment(Net PPE) was $60,370 Mil.
Depreciation, Depletion and Amortization(DDA) was $5,532 Mil.
Selling, General & Admin. Expense(SGA) was $17,769 Mil.
Total Current Liabilities was $48,439 Mil.
Long-Term Debt was $33,088 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)
=(6766.29190597 / 128523.110172) / (24375.1577281 / 122213.92145)
=0.0526465 / 0.19944665
=0.264

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)
=(27366.232601 / 122213.92145) / (28791.3296938 / 128523.110172)
=0.22392075 / 0.22401675
=0.9996

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 - (58055.8820013 + 28342.8728308) / 167895.064052) / (1 - (55269.0342924 + 60369.8961408) / 161418.751334)
=0.48540027 / 0.28360906
=1.7115

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
=128523.110172 / 122213.92145
=1.0516

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))
=(5532.18104845 / (5532.18104845 + 60369.8961408)) / (6195.57665631 / (6195.57665631 + 28342.8728308))
=0.08394547 / 0.17938201
=0.468

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)
=(14693.5647182 / 128523.110172) / (17768.666665 / 122213.92145)
=0.11432625 / 0.14538987
=0.7863

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)
=((35620.9234257 + 48078.3764994) / 167895.064052) / ((33087.5033317 + 48439.4638529) / 161418.751334)
=0.4985215 / 0.50506503
=0.987

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
=(5703.32117873 - 1332.99335505 - 8145.56323275) / 167895.064052
=-0.0225

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.

Honda Motor Co Ltd has a M-score of -2.95 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.

Honda Motor Co Ltd Annual Data

Mar08Mar09Mar10Mar11Mar12Mar13Mar14Mar15Mar16Mar17
DSRI 1.00190.92711.1870.87911.07310.91592.41350.94070.9740.264
GMI 1.00871.1161.02120.92711.06850.99470.98661.1481.01150.9996
AQI 0.86450.94190.97810.99480.98540.97791.02850.99090.93241.7115
SGI 1.12110.93120.93991.12680.95131.17681.00041.00581.0321.0516
DEPI 1.1670.84830.99531.09471.02381.02110.9791.43811.14220.468
SGAI 0.97781.14990.84510.99651.03540.89820.99170.90541.12130.7863
LVGI 1.00371.01080.94420.98391.01781.01151.01870.98461.00860.987
TATA -0.0336-0.0147-0.1047-0.049-0.0467-0.0291-0.0409-0.0379-0.0615-0.0225
M-score -2.56-2.69-2.80-2.73-2.65-2.53-1.37-2.56-2.79-2.95

Honda Motor Co Ltd Quarterly Data

Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16Dec16Mar17
DSRI 0.97410.94070.63570.23670.22960.9740.94111.07451.03580.264
GMI 1.00811.1481.18731.21331.23341.01150.97010.93370.91750.9996
AQI 0.9640.99090.96480.98160.95610.93240.94280.93790.94111.7115
SGI 0.98921.00581.01041.03741.07081.0321.05141.04921.03441.0516
DEPI 1.00971.43811.66881.9092.32141.14220.96380.82930.69040.468
SGAI 1.02130.90540.8690.86860.83251.12131.1321.11321.0840.7863
LVGI 0.99290.98460.99560.98720.97451.00860.99430.98941.00080.987
TATA -0.045-0.0379-0.0389-0.0395-0.0406-0.0615-0.0485-0.0417-0.0316-0.0225
M-score -2.73-2.56-2.80-3.10-3.02-2.79-2.78-2.66-2.68-2.95
Get WordPress Plugins for easy affiliate links on Stock Tickers and Guru Names | Earn affiliate commissions by embedding GuruFocus Charts
GuruFocus Affiliate Program: Earn up to $400 per referral. ( Learn More)

GF Chat

{{numOfNotice}}
FEEDBACK