Hitachi Construction Machinery Co (TSE:6305) Beneish M-Score : -2.51 (As of May. 01, 2024)

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What is Hitachi Construction Machinery Co Beneish M-Score?

The zones of discrimination for M-Score is as such:

An M-Score of equal or less than -1.78 suggests that the company is unlikely to be a manipulator.
An M-Score of greater than -1.78 signals that the company is likely to be a manipulator.

Good Sign:

Beneish M-Score -2.51 no higher than -1.78, which implies that the company is unlikely to be a manipulator.

The historical rank and industry rank for Hitachi Construction Machinery Co's Beneish M-Score or its related term are showing as below:

TSE:6305' s Beneish M-Score Range Over the Past 10 Years
Min: -3.21 Med: -2.52 Max: -2.07
Current: -2.51

During the past 13 years, the highest Beneish M-Score of Hitachi Construction Machinery Co was -2.07. The lowest was -3.21. And the median was -2.52.

Hitachi Construction Machinery Co Beneish M-Score Historical Data

The historical data trend for Hitachi Construction Machinery Co's Beneish M-Score can be seen below:

* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD.
* For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.

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Hitachi Construction Machinery Co Beneish M-Score Chart

Hitachi Construction Machinery Co Annual Data

Trend

Mar15

Mar16

Mar17

Mar18

Mar19

Mar20

Mar21

Mar22

Mar23

Mar24

Beneish M-Score

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-2.52

-2.69

-2.23

-2.14

-2.51

Hitachi Construction Machinery Co Quarterly Data
	Jun19	Sep19	Dec19	Mar20	Jun20	Sep20	Dec20	Mar21	Jun21	Sep21	Dec21	Mar22	Jun22	Sep22	Dec22	Mar23	Jun23	Sep23	Dec23	Mar24
Beneish M-Score	Get a 7-Day Free Trial															-2.14	-1.98	-2.18	-2.36	-2.51

Competitive Comparison of Hitachi Construction Machinery Co's Beneish M-Score

For the Farm & Heavy Construction Machinery subindustry, Hitachi Construction Machinery Co's Beneish M-Score, along with its competitors' market caps and Beneish M-Score data, can be viewed below:

* Competitive companies are chosen from companies within the same industry, with headquarter located in same country, with closest market capitalization; x-axis shows the market cap, and y-axis shows the term value; the bigger the dot, the larger the market cap. Note that "N/A" values will not show up in the chart.

Hitachi Construction Machinery Co's Beneish M-Score Distribution in the Farm & Heavy Construction Machinery Industry

For the Farm & Heavy Construction Machinery industry and Industrials sector, Hitachi Construction Machinery Co's Beneish M-Score distribution charts can be found below:

* The bar in red indicates where Hitachi Construction Machinery Co's Beneish M-Score falls into.

Hitachi Construction Machinery Co Beneish M-Score Calculation

The M-score was created by Professor Messod Beneish. Instead of measuring the bankruptcy risk (Altman Z-Score) or business trend (Piotroski 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 Hitachi Construction Machinery Co for today is based on a combination of the following eight different indices:

-4.84

0.92 * DSRI

0.528 * GMI

0.404 * AQI

0.892 * SGI

0.115 * DEPI

-4.84

0.92 * 0.9113

0.528 * 0.9543

0.404 * 0.8245

0.892 * 1.0988

0.115 * 1.0266

0.172 * SGAI

4.679 * TATA

0.327 * LVGI

0.172 * 1.0036

4.679 * 0.01104

0.327 * 0.9864

-2.51

This Year (Mar24) TTM:

Last Year (Mar23) TTM:

Total Receivables was 円305,731 Mil.
Revenue was 385559 + 346269 + 354094 + 320006 = 円1,405,928 Mil.
Gross Profit was 115954 + 109145 + 110389 + 99682 = 円435,170 Mil.
Total Current Assets was 円1,077,550 Mil.
Total Assets was 円1,835,005 Mil.
Property, Plant and Equipment(Net PPE) was 円538,260 Mil.
Depreciation, Depletion and Amortization(DDA) was 円68,121 Mil.
Selling, General, & Admin. Expense(SGA) was 円267,142 Mil.
Total Current Liabilities was 円727,748 Mil.
Long-Term Debt & Capital Lease Obligation was 円241,811 Mil.
Net Income was 22220 + 13574 + 26081 + 31419 = 円93,294 Mil.
Non Operating Income was 0 + 0 + 0 + 0 = 円0 Mil.
Cash Flow from Operations was 44386 + 500 + 40649 + -12500 = 円73,035 Mil.

Total Receivables was 円305,317 Mil.
Revenue was 376720 + 323846 + 311363 + 267539 = 円1,279,468 Mil.
Gross Profit was 114682 + 98485 + 91172 + 73609 = 円377,948 Mil.
Total Current Assets was 円908,905 Mil.
Total Assets was 円1,627,003 Mil.
Property, Plant and Equipment(Net PPE) was 円482,382 Mil.
Depreciation, Depletion and Amortization(DDA) was 円62,886 Mil.
Selling, General, & Admin. Expense(SGA) was 円242,247 Mil.
Total Current Liabilities was 円614,870 Mil.
Long-Term Debt & Capital Lease Obligation was 円256,672 Mil.

1. DSRI = Days Sales in Receivables Index

Measured as the ratio of Revenue in Total 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)
	=	(305731 / 1405928)	/	(305317 / 1279468)
	=	0.217459	/	0.238628
	=	0.9113

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)
	=	(377948 / 1279468)	/	(435170 / 1405928)
	=	0.295395	/	0.309525
	=	0.9543

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 Property, Plant and Equipment to Total Assets.

AQI	=	(1 - (CurrentAssets_t + PPE_t) / TotalAssets_t)	/	(1 - (CurrentAssets_t-1 + PPE_t-1) / TotalAssets_t-1)
	=	(1 - (1077550 + 538260) / 1835005)	/	(1 - (908905 + 482382) / 1627003)
	=	0.119452	/	0.144877
	=	0.8245

4. SGI = Sales Growth Index

Ratio of Revenue 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
	=	1405928	/	1279468
	=	1.0988

5. DEPI = Depreciation Index

Measured as the ratio of the rate of Depreciation, Depletion and Amortization 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))
	=	(62886 / (62886 + 482382))	/	(68121 / (68121 + 538260))
	=	0.11533	/	0.11234
	=	1.0266

Note: If the Depreciation, Depletion and Amortization data is not available, we assume that the depreciation rate is constant and set the Depreciation Index to 1.

6. SGAI = Sales, General and Administrative expenses Index

The ratio of Selling, General, & Admin. Expense(SGA) to Sales 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)
	=	(267142 / 1405928)	/	(242247 / 1279468)
	=	0.190011	/	0.189334
	=	1.0036

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 in leverage

LVGI	=	((LTD_t + CurrentLiabilities_t) / TotalAssets_t)	/	((LTD_t-1 + CurrentLiabilities_t-1) / TotalAssets_t-1)
	=	((241811 + 727748) / 1835005)	/	((256672 + 614870) / 1627003)
	=	0.528369	/	0.535673
	=	0.9864

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
	=	(93294 - 0	-	73035)	/	1835005
	=	0.01104

An M-Score of equal or less than -1.78 suggests that the company is unlikely to be a manipulator. An M-Score of greater than -1.78 signals that the company is likely to be a manipulator.

Hitachi Construction Machinery Co has a M-score of -2.51 suggests that the company is unlikely to be a manipulator.

Hitachi Construction Machinery Co Beneish M-Score Related Terms

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Hitachi Construction Machinery Co (TSE:6305) Business Description

Industry

GURUFOCUS.COM » STOCK LIST » Industrials » Farm & Heavy Construction Machinery » Hitachi Construction Machinery Co Ltd (TSE:6305) » Definitions » Beneish M-Score

Comparable Companies

Traded in Other Exchanges

HTCMY:USA HCM:Germany

Address

16-1, Higashiueno 2-chome, Taito-ku, Tokyo, JPN, 110-0015

Website

https://www.hitachicm.com

Hitachi Construction Machinery, or HCM, manufactures and sells construction and mining machinery, and provides related services such as parts supply, rentals, and others. HCM was established in 1970 as a subsidiary of Hitachi, but its origins date back to 1949 when it introduced Japan's first mechanical excavator. The company's main products include hydraulic excavators for mining/construction, rigid dump trucks, and wheel loaders. As of August 2022, Hitachi is no longer the parent company of HCM, after selling 26% of its stake to HCJI Holdings, a joint venture between Itochu and Japan Industrial Partners. Currently, Hitachi has a 25.4% stake in Hitachi Construction Machinery as an equity-method affiliate. HCM is based in Tokyo, Japan.

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