Honda Beneish M Score

HMC
 Stock
  

USD 24.60  0.43  1.78%   

This module uses fundamental data of Honda to approximate the value of its Beneish M Score. Honda M Score tells investors if the company management is likely to be manipulating earnings. The score is calculated using eight financial indicators that are adjusted by a specific multiplier. Please note, the M Score is a probabilistic model and cannot detect companies that manipulate their earnings with 100% accuracy. Please check Honda Piotroski F Score and Honda Altman Z Score analysis.
  
Honda Debt Current is projected to increase significantly based on the last few years of reporting. The past year's Debt Current was at 3.36 Trillion. The current year Debt to Equity Ratio is expected to grow to 1.31, whereas Total Debt is forecasted to decline to about 8470.4 B. Honda Asset Turnover is projected to slightly decrease based on the last few years of reporting. The past year's Asset Turnover was at 0.65. The current year Current Ratio is expected to grow to 1.51, whereas Book Value per Share is forecasted to decline to 5,571.
At this time, it appears that Honda Motor is an unlikely manipulator. The earnings manipulation may begin if Honda's top management creates an artificial sense of financial success, forcing the stock price to be traded at a high price-earnings multiple than it should be. In general, excessive earnings management by Honda executives may lead to removing some of the operating profits from subsequent periods to inflate earnings in the following periods. This way, the manipulation of Honda's earnings can lead to misrepresentations of actual financial condition, taking the otherwise loyal stakeholders on to the path of questionable ethical practices and plain fraud.
-2.7
Beneish M Score - Unlikely Manipulator
Elasticity of Receivables0.94Focus
Asset QualityN/AFocus
Expense Coverage1.24Focus
Gross Margin Strengs0.98Focus
Accruals Factor1.24Focus
Depreciation Resistance0.88Focus
Net Sales Growth0.98Focus
Financial Leverage ConditionN/AFocus

Honda Beneish M-Score Indicator Trends

The cure to earnings manipulation is the transparency of financial reporting. It will typically remove the temptation of the top executives to inflate earnings (i.e., to promote the idea of 'winning at any cost'). Because a healthy internal audit department can enhance transparency, the board should promote the auditors' access to all the record-keeping systems across the enterprise. For example, if Honda's auditors report directly to the board (not management), the managers will be reluctant to manipulate simply due to the fear of punishment. On the other hand, the auditors will be free to investigate the ledgers properly because they know that the board has their back.
Current ValueLast YearChange From Last Year 10 Year Trend
Selling General and Administrative Expense1618.1 B1326.5 B
Fairly Up
Increasing
Stable
Revenues11138.9 B11359.6 B
Fairly Down
Increasing
Slightly volatile
Trade and Non Trade Receivables828.5 B896.8 B
Significantly Down
Decreasing
Slightly volatile
Property Plant and Equipment Net8116.6 B8238.5 B
Fairly Down
Increasing
Slightly volatile
Operating Income844.8 B871.2 B
Sufficiently Down
Increasing
Slightly volatile
Net Cash Flow from Operations1452.6 B1679.6 B
Fairly Down
Increasing
Slightly volatile
Liabilities Non Current7052.4 B7196.2 B
Fairly Down
Increasing
Slightly volatile
Current Liabilities6196.8 B6004.4 B
Sufficiently Up
Increasing
Slightly volatile
Total Liabilities10620 B10934.9 B
Fairly Down
Increasing
Slightly volatile
Investments Non Current5384.8 B5527.4 B
Fairly Down
Increasing
Slightly volatile
Investments Current2073.5 B1911.9 B
Significantly Up
Increasing
Slightly volatile
Investments7458.3 B7439.3 B
Slightly Up
Increasing
Slightly volatile
Gross Margin0.20.205
Fairly Down
Decreasing
Slightly volatile
Depreciation Amortization and Accretion693.4 B611.1 B
Moderately Up
Increasing
Slightly volatile
Debt Non Current5032.6 B5266.3 B
Sufficiently Down
Increasing
Slightly volatile
Debt Current3437.8 B3355.2 B
Fairly Up
Increasing
Slightly volatile
Total Debt8470.4 B8621.5 B
Fairly Down
Increasing
Slightly volatile
Assets Non Current10827.7 B11328.4 B
Sufficiently Down
Increasing
Slightly volatile
Current Assets8491.3 B8841.4 B
Sufficiently Down
Increasing
Slightly volatile

Honda Motor Beneish M-Score Driver Matrix

One of the toughest challenges investors face today is learning how to quickly synthesize historical financial statements and information provided by the company, SEC reporting, and various external parties in order to detect the potential manipulation of earnings. Understanding the correlation between Honda's different financial indicators related to revenue, expenses, operating profit, and net earnings helps investors identify and prioritize their investing strategies towards Honda in a much-optimized way. Analyzing correlations between earnings drivers directly associated with dollar figures is the most effective way to find Honda's degree of accounting gimmicks and manipulations.

About Honda Beneish M Score

M-Score is one of many grading techniques for value stocks. It was developed by Professor M. Daniel Beneish of the Kelley School of Business at Indiana University and published in 1999 under the paper titled The Detection of Earnings Manipulation. The Beneish score is a multi-factor model that utilizes financial identifiers to compile eight variables used to classify whether a company has manipulated its reported earnings. The variables are built from the officially filed financial statements to create a final score call 'M Score.' The score helps to identify companies that are likely to manipulate their profits if they show deteriorating gross margins, operating expenses, and leverage against growing revenue.

Operating Expenses

2.43 Trillion

Honda Operating Expenses is projected to increase significantly based on the last few years of reporting. The past year's Operating Expenses was at 2.11 Trillion

Honda Earnings Manipulation Drivers

Although earnings manipulation is typically not the result of intentional misconduct by the c-level executives, it is still a widespread practice by the senior management of public companies such as Honda. It is usually done by a series of misrepresentations of various accounting rules and operating activities across multiple financial cycles. The best way to spot the manipulation is to examine the historical financial statement to find inconsistencies in earning reports to find trends in assets or liabilities that are not sustainable in the future.
201720182019202020212022 (projected)
Current Assets6,925.29 B7,347.29 B7,301.01 B7,579.09 B8,841.42 B8,491.32 B
Current Liabilities5,624.1 B5,981.12 B5,790.09 B5,715.46 B6,004.4 B6,196.82 B
Total Debt6,974.42 B7,527.72 B7,982.32 B8,183.94 B8,621.54 B8,470.44 B
Debt Current3,032.67 B3,321.69 B3,457.52 B3,187.77 B3,355.2 B3,437.83 B
Debt Non Current3,941.75 B4,206.03 B4,524.8 B4,996.17 B5,266.34 B5,032.61 B
Operating Income833.56 B726.37 B633.64 B660.21 B871.23 B844.84 B
Investments6,287.31 B6,698.71 B6,448.42 B7,229.39 B7,439.3 B7,458.29 B
Investments Current2,053.88 B2,114.91 B2,068.41 B2,089.96 B1,911.86 B2,073.45 B

About Honda Fundamental Analysis

The Macroaxis Fundamental Analysis modules help investors analyze Honda Motor Co's financials across various querterly and yearly statements, indicators and fundamental ratios. We help investors to determine the real value of Honda using virtually all public information available. We use both quantitative as well as qualitative analysis to arrive at the intrinsic value of Honda Motor Co based on its fundamental data. In general, a quantitative approach, as applied to this company, focuses on analyzing financial statements comparatively, whereas a qaualitative method uses data that is important to a company's growth but cannot be measured and presented in a numerical way.
Please read more on our fundamental analysis page.
Honda Motor Co., Ltd. develops, manufactures, and distributes motorcycles, automobiles, power products, and other products in Japan, North America, Europe, Asia, and internationally. Honda Motor Co., Ltd. was founded in 1946 and is headquartered in Tokyo, Japan. Honda operates under Auto Manufacturers classification in the United States and is traded on New York Stock Exchange. It employs 204035 people.

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Please check Honda Piotroski F Score and Honda Altman Z Score analysis. You can also try Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.

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Is Honda's industry expected to grow? Or is there an opportunity to expand the business' product line in the future? Factors like these will boost the valuation of Honda. If investors know Honda will grow in the future, the company's valuation will be higher. The financial industry is built on trying to define current growth potential and future valuation accurately. All the valuation information about Honda listed above have to be considered, but the key to understanding future value is determining which factors weigh more heavily than others.
Quarterly Earnings Growth YOY
0.15
Market Capitalization
41 B
Quarterly Revenue Growth YOY
0.25
Return On Assets
0.0231
Return On Equity
0.0666
The market value of Honda Motor is measured differently than its book value, which is the value of Honda that is recorded on the company's balance sheet. Investors also form their own opinion of Honda's value that differs from its market value or its book value, called intrinsic value, which is Honda's true underlying value. Investors use various methods to calculate intrinsic value and buy a stock when its market value falls below its intrinsic value. Because Honda's market value can be influenced by many factors that don't directly affect Honda's underlying business (such as a pandemic or basic market pessimism), market value can vary widely from intrinsic value.
Please note, there is a significant difference between Honda's value and its price as these two are different measures arrived at by different means. Investors typically determine Honda value by looking at such factors as earnings, sales, fundamental and technical indicators, competition as well as analyst projections. However, Honda's price is the amount at which it trades on the open market and represents the number that a seller and buyer find agreeable to each party.