Switch to:
GuruFocus has detected 3 Warning Signs with CarMax Inc $KMX.
More than 500,000 people have already joined GuruFocus to track the stocks they follow and exchange investment ideas.
CarMax Inc (NYSE:KMX)
Beneish M-Score
-2.11 (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.

CarMax Inc has a M-score of -2.11 signals that the company is a manipulator.

KMX' s Beneish M-Score Range Over the Past 10 Years
Min: -2.91   Max: 3.15
Current: -2.11

-2.91
3.15

During the past 13 years, the highest Beneish M-Score of CarMax Inc was 3.15. The lowest was -2.91. And the median was -2.36.


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 CarMax 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 * 1.1003+0.528 * 0.9689+0.404 * 0.9841+0.892 * 1.0479+0.115 * 0.9507
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.2886+4.679 * 0.0673-0.327 * 1.0142
=-2.11

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

This Year (Feb17) TTM:Last Year (Feb16) TTM:
Accounts Receivable was $152 Mil.
Revenue was 4049.96 + 3701.524 + 3997.248 + 4126.386 = $15,875 Mil.
Gross Profit was 562.16 + 503.135 + 545.362 + 572.637 = $2,183 Mil.
Total Current Assets was $2,874 Mil.
Total Assets was $16,279 Mil.
Property, Plant and Equipment(Net PPE) was $2,518 Mil.
Depreciation, Depletion and Amortization(DDA) was $169 Mil.
Selling, General & Admin. Expense(SGA) was $2,290 Mil.
Total Current Liabilities was $1,106 Mil.
Long-Term Debt was $11,826 Mil.
Net Income was 152.603 + 136.645 + 162.362 + 175.36 = $627 Mil.
Non Operating Income was -0.977 + -1.027 + 0.435 + 0.616 = $-1 Mil.
Cash Flow from Operations was -125.012 + -303.285 + -125.205 + 85.364 = $-468 Mil.
Accounts Receivable was $132 Mil.
Revenue was 3705.805 + 3544.069 + 3884.913 + 4014.888 = $15,150 Mil.
Gross Profit was 489.265 + 464.331 + 521.37 + 543.794 = $2,019 Mil.
Total Current Assets was $2,472 Mil.
Total Assets was $14,460 Mil.
Property, Plant and Equipment(Net PPE) was $2,162 Mil.
Depreciation, Depletion and Amortization(DDA) was $137 Mil.
Selling, General & Admin. Expense(SGA) was $1,696 Mil.
Total Current Liabilities was $1,005 Mil.
Long-Term Debt was $10,321 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)
=(152.388 / 15875.118) / (132.171 / 15149.675)
=0.00959917 / 0.00872435
=1.1003

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)
=(2018.76 / 15149.675) / (2183.294 / 15875.118)
=0.13325434 / 0.13752931
=0.9689

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 - (2873.63 + 2518.393) / 16279.356) / (1 - (2471.781 + 2161.698) / 14459.911)
=0.66878155 / 0.6795638
=0.9841

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
=15875.118 / 15149.675
=1.0479

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))
=(137.36 / (137.36 + 2161.698)) / (168.875 / (168.875 + 2518.393))
=0.05974621 / 0.06284263
=0.9507

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)
=(2290.286 / 15875.118) / (1696.117 / 15149.675)
=0.14426891 / 0.11195732
=1.2886

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)
=((11826.438 + 1105.787) / 16279.356) / ((10320.658 + 1005.193) / 14459.911)
=0.79439414 / 0.78325869
=1.0142

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
=(626.97 - -0.953 - -468.138) / 16279.356
=0.0673

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.

CarMax Inc has a M-score of -2.11 signals that the company is likely to 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.

CarMax Inc Annual Data

Feb08Feb09Feb10Feb11Feb12Feb13Feb14Feb15Feb16Feb17
DSRI 0.93361.21831.22341.00110.64840.97090.75771.51820.90411.1003
GMI 0.99450.94210.94381.01471.05191.03181.01880.99120.99270.9689
AQI 1.10471.32070.646115.8510.94650.99651.01791.04671.02560.9841
SGI 1.09830.85051.07121.20151.11451.09591.1471.13481.06171.0479
DEPI 0.98170.93010.89950.81.25940.9731.07640.99720.97470.9507
SGAI 1.00691.20860.86620.89340.960510.97690.95941.27011.2886
LVGI 1.0620.91450.70243.27111.02391.02361.03671.05981.05311.0142
TATA 0.0065-0.10250.09050.04080.05710.11490.09460.11890.05430.0673
M-score -2.41-2.81-1.853.15-2.40-1.88-2.11-1.33-2.32-2.11

CarMax Inc Quarterly Data

Nov14Feb15May15Aug15Nov15Feb16May16Aug16Nov16Feb17
DSRI 1.15521.51820.9490.83550.92830.90410.9420.90411.00091.1003
GMI 1.02080.99120.98530.96550.96850.99270.98960.99540.98660.9689
AQI 1.03761.04671.03571.03111.02051.02561.02890.99441.00580.9841
SGI 1.12211.13481.11681.10861.08151.06171.05011.03741.03831.0479
DEPI 1.00680.99720.97921.00120.99280.97470.96890.93050.93910.9507
SGAI 0.97210.95940.8840.72990.74421.27011.52012.1212.09311.2886
LVGI 1.06611.05981.04531.05411.0591.05311.05321.04531.01581.0142
TATA 0.11370.11890.09170.08940.08310.05430.05480.04650.04670.0673
M-score -1.69-1.33-1.98-2.09-2.07-2.32-2.34-2.54-2.43-2.11
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)
FEEDBACK