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GuruFocus has detected 1 Warning Sign with Harley-Davidson Inc $HOG.
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Harley-Davidson Inc (NYSE:HOG)
Beneish M-Score
-2.69 (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.

Harley-Davidson Inc has a M-score of -2.69 suggests that the company is not a manipulator.

HOG' s Beneish M-Score Range Over the Past 10 Years
Min: -3.62   Max: -0.86
Current: -2.69

-3.62
-0.86

During the past 13 years, the highest Beneish M-Score of Harley-Davidson Inc was -0.86. The lowest was -3.62. And the median was -2.57.


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 Harley-Davidson 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 * 1.1363+0.528 * 1.0243+0.404 * 1.0277+0.892 * 0.9466+0.115 * 0.9694
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0255+4.679 * -0.0651-0.327 * 0.9964
=-2.69

* 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 $336 Mil.
Revenue was 1501.932 + 1110.6 + 1274.813 + 1861.077 = $5,748 Mil.
Gross Profit was 607.417 + 422.017 + 507.629 + 755.627 = $2,293 Mil.
Total Current Assets was $4,238 Mil.
Total Assets was $10,282 Mil.
Property, Plant and Equipment(Net PPE) was $953 Mil.
Depreciation, Depletion and Amortization(DDA) was $214 Mil.
Selling, General & Admin. Expense(SGA) was $1,198 Mil.
Total Current Liabilities was $2,557 Mil.
Long-Term Debt was $5,321 Mil.
Net Income was 186.369 + 47.179 + 114.065 + 280.431 = $628 Mil.
Non Operating Income was 0.879 + 0.891 + 2.3 + 0.688 = $5 Mil.
Cash Flow from Operations was 159.939 + 246.53 + 471.519 + 415.159 = $1,293 Mil.
Accounts Receivable was $312 Mil.
Revenue was 1749.968 + 1180.635 + 1317.43 + 1824.392 = $6,072 Mil.
Gross Profit was 717.719 + 453.452 + 529.934 + 779.635 = $2,481 Mil.
Total Current Assets was $4,492 Mil.
Total Assets was $10,468 Mil.
Property, Plant and Equipment(Net PPE) was $933 Mil.
Depreciation, Depletion and Amortization(DDA) was $202 Mil.
Selling, General & Admin. Expense(SGA) was $1,234 Mil.
Total Current Liabilities was $2,588 Mil.
Long-Term Debt was $5,461 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)
=(335.578 / 5748.422) / (311.96 / 6072.425)
=0.05837741 / 0.05137322
=1.1363

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)
=(2480.74 / 6072.425) / (2292.69 / 5748.422)
=0.40852542 / 0.39883815
=1.0243

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 - (4237.92 + 953.044) / 10281.855) / (1 - (4491.75 + 932.836) / 10467.671)
=0.49513351 / 0.48177718
=1.0277

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
=5748.422 / 6072.425
=0.9466

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))
=(202.073 / (202.073 + 932.836)) / (214.428 / (214.428 + 953.044))
=0.17805216 / 0.18366864
=0.9694

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)
=(1198.021 / 5748.422) / (1234.114 / 6072.425)
=0.20840867 / 0.20323248
=1.0255

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)
=((5320.797 + 2556.739) / 10281.855) / ((5460.553 + 2588.006) / 10467.671)
=0.76615902 / 0.76889683
=0.9964

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
=(628.044 - 4.758 - 1293.147) / 10281.855
=-0.0651

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.

Harley-Davidson Inc has a M-score of -2.69 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.

Harley-Davidson Inc Annual Data

Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15Dec16
DSRI 1.281.43471.26440.95850.76370.99981.07330.89851.0381.1522
GMI 1.0170.96071.22070.83961.01660.96010.97750.97910.97981.031
AQI 1.15340.79712.68281.13040.92631.05051.03611.01371.02781.0088
SGI 0.98971.02050.8031.01621.09311.05061.05721.05570.96261.0002
DEPI 1.06940.93430.74570.9191.38341.01281.08740.98060.97180.9872
SGAI 1.07521.15341.15051.02520.95120.99690.95740.97651.09320.9976
LVGI 1.14441.2021.1370.9940.97610.9470.98381.02451.17731.0017
TATA 0.04710.1694-0.0647-0.0912-0.0304-0.0196-0.0265-0.0322-0.0355-0.0492
M-score -1.99-1.47-2.02-2.97-2.72-2.51-2.46-2.69-2.72-2.55

Harley-Davidson Inc Quarterly Data

Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16Dec16Mar17
DSRI 0.89850.84630.99911.06211.0381.1311.10361.16721.15221.1363
GMI 0.97910.97250.99060.99250.97981.0021.01881.02011.0311.0243
AQI 1.01370.97460.97670.97941.02781.05791.031.03431.00881.0277
SGI 1.05571.01990.95820.96720.96260.98331.01831.00861.00020.9466
DEPI 0.98060.98160.95380.97950.97180.96810.98830.9870.98720.9694
SGAI 0.97651.00751.08251.07211.09321.08121.04491.05380.99761.0255
LVGI 1.02451.06351.08041.1481.17731.15021.12811.05181.00170.9964
TATA -0.0322-0.0269-0.0381-0.0395-0.0355-0.0229-0.0226-0.0317-0.0492-0.0651
M-score -2.69-2.78-2.76-2.71-2.72-2.52-2.50-2.47-2.55-2.69
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