Switch to:
GuruFocus has detected 4 Warning Signs with Mohawk Industries Inc $MHK.
More than 500,000 people have already joined GuruFocus to track the stocks they follow and exchange investment ideas.
Mohawk Industries Inc (NYSE:MHK)
Beneish M-Score
-2.59 (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.

Mohawk Industries Inc has a M-score of -2.59 suggests that the company is not a manipulator.

MHK' s Beneish M-Score Range Over the Past 10 Years
Min: -4.48   Max: 0.03
Current: -2.59

-4.48
0.03

During the past 13 years, the highest Beneish M-Score of Mohawk Industries Inc was 0.03. The lowest was -4.48. And the median was -2.52.


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 Mohawk Industries 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 * 0.9845+0.528 * 0.9582+0.404 * 0.9298+0.892 * 1.0772+0.115 * 0.991
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9565+4.679 * -0.0364-0.327 * 0.8449
=-2.59

* 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 $1,509 Mil.
Revenue was 2220.645 + 2182.566 + 2294.139 + 2310.336 = $9,008 Mil.
Gross Profit was 680.353 + 690.999 + 726.559 + 755.588 = $2,853 Mil.
Total Current Assets was $3,735 Mil.
Total Assets was $10,728 Mil.
Property, Plant and Equipment(Net PPE) was $3,506 Mil.
Depreciation, Depletion and Amortization(DDA) was $414 Mil.
Selling, General & Admin. Expense(SGA) was $1,544 Mil.
Total Current Liabilities was $2,828 Mil.
Long-Term Debt was $1,132 Mil.
Net Income was 200.554 + 233.748 + 269.878 + 255.188 = $959 Mil.
Non Operating Income was 2.832 + 3.19 + -3.839 + 5.807 = $8 Mil.
Cash Flow from Operations was 165.882 + 342.872 + 435.301 + 397.509 = $1,342 Mil.
Accounts Receivable was $1,423 Mil.
Revenue was 2172.046 + 1997.997 + 2150.656 + 2041.733 = $8,362 Mil.
Gross Profit was 639.679 + 622.21 + 661.404 + 615.129 = $2,538 Mil.
Total Current Assets was $3,471 Mil.
Total Assets was $10,292 Mil.
Property, Plant and Equipment(Net PPE) was $3,224 Mil.
Depreciation, Depletion and Amortization(DDA) was $377 Mil.
Selling, General & Admin. Expense(SGA) was $1,499 Mil.
Total Current Liabilities was $3,324 Mil.
Long-Term Debt was $1,174 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)
=(1508.927 / 9007.686) / (1422.935 / 8362.432)
=0.1675155 / 0.17015804
=0.9845

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)
=(2538.422 / 8362.432) / (2853.499 / 9007.686)
=0.30355069 / 0.31678491
=0.9582

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 - (3734.982 + 3506.154) / 10727.517) / (1 - (3470.551 + 3224.327) / 10292.315)
=0.32499422 / 0.34952652
=0.9298

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
=9007.686 / 8362.432
=1.0772

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))
=(377.185 / (377.185 + 3224.327)) / (414.297 / (414.297 + 3506.154))
=0.10472962 / 0.10567585
=0.991

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)
=(1544.444 / 9007.686) / (1498.958 / 8362.432)
=0.17145846 / 0.17924905
=0.9565

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)
=((1132.268 + 2828.327) / 10727.517) / ((1173.6 + 3323.668) / 10292.315)
=0.3691996 / 0.43695398
=0.8449

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
=(959.368 - 7.99 - 1341.564) / 10727.517
=-0.0364

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.

Mohawk Industries Inc has a M-score of -2.59 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.

Mohawk Industries Inc Annual Data

Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15Dec16
DSRI 0.94030.94231.23640.85841.14090.96741.22640.94581.11161.0044
GMI 1.01241.09511.1040.87441.05010.97540.98490.94680.92430.9513
AQI 1.02910.71980.99391.01160.95210.9680.97470.98551.13390.9303
SGI 0.95950.89990.78290.99531.06081.02581.26971.06191.03441.11
DEPI 0.94671.01070.91830.96711.00981.04281.38460.90511.0970.9538
SGAI 1.02151.07371.15140.92010.95390.9830.97440.94691.1010.8779
LVGI 0.79711.140.98970.91780.96170.92241.18860.99411.10780.8399
TATA -0.0204-0.3123-0.1069-0.0239-0.0182-0.0535-0.0197-0.0144-0.0281-0.039
M-score -2.59-4.20-2.94-2.75-2.35-2.73-2.15-2.58-2.51-2.55

Mohawk Industries Inc Quarterly Data

Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16Dec16Mar17
DSRI 0.94581.02121.14951.06661.11161.150.95581.03211.00440.9845
GMI 0.94680.95060.95170.94130.92430.91440.91150.92840.95130.9582
AQI 0.98550.96521.15811.18841.13391.17610.98780.96160.93030.9298
SGI 1.06191.02561.01521.0321.03441.06241.09741.09341.111.0772
DEPI 0.90510.90850.99951.01261.0971.12640.97951.00080.95380.991
SGAI 0.92440.99581.03031.02561.1010.94130.93480.90530.87790.9565
LVGI 0.99411.00281.13471.08431.10781.03490.88490.87820.83990.8449
TATA -0.0144-0.0248-0.0311-0.0407-0.0281-0.0317-0.0337-0.0325-0.039-0.0364
M-score -2.57-2.60-2.49-2.57-2.51-2.40-2.60-2.52-2.55-2.59
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