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Brown-Forman Corp (NYSE:BF.B)
Beneish M-Score
-2.62 (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.

Brown-Forman Corp has a M-score of -2.62 suggests that the company is not a manipulator.

BF.B' s Beneish M-Score Range Over the Past 10 Years
Min: -2.93   Max: -1.88
Current: -2.62

-2.93
-1.88

During the past 13 years, the highest Beneish M-Score of Brown-Forman Corp was -1.88. The lowest was -2.93. And the median was -2.49.


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 Brown-Forman Corp 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 * 0.9929+0.528 * 1.0018+0.404 * 0.9062+0.892 * 1.0055+0.115 * 1.0683
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9542+4.679 * 0.0014-0.327 * 1.3909
=-2.62

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.

This Year (Jan16) TTM:Last Year (Jan15) TTM:
Accounts Receivable was $630 Mil.
Revenue was 809 + 854 + 699 + 739 = $3,101 Mil.
Gross Profit was 555 + 586 + 491 + 526 = $2,158 Mil.
Total Current Assets was $2,405 Mil.
Total Assets was $4,333 Mil.
Property, Plant and Equipment(Net PPE) was $621 Mil.
Depreciation, Depletion and Amortization(DDA) was $53 Mil.
Selling, General & Admin. Expense(SGA) was $1,112 Mil.
Total Current Liabilities was $1,100 Mil.
Long-Term Debt was $1,229 Mil.
Net Income was 190 + 200 + 156 + 141 = $687 Mil.
Non Operating Income was 0 + 0 + 0 + 0 = $0 Mil.
Cash Flow from Operations was 287 + 14 + 147 + 233 = $681 Mil.
Accounts Receivable was $631 Mil.
Revenue was 813 + 877 + 705 + 689 = $3,084 Mil.
Gross Profit was 553 + 609 + 495 + 493 = $2,150 Mil.
Total Current Assets was $2,209 Mil.
Total Assets was $4,161 Mil.
Property, Plant and Equipment(Net PPE) was $567 Mil.
Depreciation, Depletion and Amortization(DDA) was $52 Mil.
Selling, General & Admin. Expense(SGA) was $1,159 Mil.
Total Current Liabilities was $860 Mil.
Long-Term Debt was $748 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)
=(630 / 3101) / (631 / 3084)
=0.20316027 / 0.20460441
=0.9929

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)
=(586 / 3084) / (555 / 3101)
=0.69714656 / 0.69590455
=1.0018

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 - (2405 + 621) / 4333) / (1 - (2209 + 567) / 4161)
=0.30163859 / 0.33285268
=0.9062

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
=3101 / 3084
=1.0055

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))
=(52 / (52 + 567)) / (53 / (53 + 621))
=0.08400646 / 0.07863501
=1.0683

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)
=(1112 / 3101) / (1159 / 3084)
=0.358594 / 0.37581064
=0.9542

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)
=((1229 + 1100) / 4333) / ((748 + 860) / 4161)
=0.53750288 / 0.38644557
=1.3909

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
=(687 - 0 - 681) / 4333
=0.0014

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.

Brown-Forman Corp has a M-score of -2.62 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 own currency.

Brown-Forman Corp Annual Data

Apr06Apr07Apr08Apr09Apr10Apr11Apr12Apr13Apr14Apr15
DSRI 1.27681.11430.96320.84311.14451.13290.68531.46350.9890.9779
GMI 0.90581.00121.01711.03280.97420.97871.34220.72380.98770.9974
AQI 0.73571.56081.0710.95961.00550.88181.05650.97770.91310.9457
SGI 0.85471.12251.16410.96090.99521.04741.39750.78831.04981.0478
DEPI 1.29881.17270.85080.91980.91310.89761.14031.07441.17271.0842
SGAI 0.99670.99380.96330.96220.95951.00950.7651.33541.01010.9646
LVGI 0.90131.48040.82590.94070.8051.04710.79961.55410.93661.0715
TATA -0.0260.0042-0.0282-0.0161-0.03040.0121-0.00090.01490.00240.0181
M-score -2.57-2.15-2.42-2.72-2.44-2.35-2.09-2.56-2.44-2.40

Brown-Forman Corp Quarterly Data

Oct13Jan14Apr14Jul14Oct14Jan15Apr15Jul15Oct15Jan16
DSRI 1.00431.01030.98970.96261.00050.89220.97750.88810.93930.9929
GMI 0.98170.99440.98750.98490.990.99070.997711.00431.0018
AQI 1.00410.98350.91310.89750.92970.95410.94570.940.95690.9062
SGI 1.06521.06041.04911.04841.04341.04151.04821.03951.0171.0055
DEPI 1.06721.07251.17271.15491.13671.10781.08421.11881.06531.0683
SGAI 0.99040.97371.01171.00341.02651.02280.96250.95770.94260.9542
LVGI 1.49710.85180.93660.95110.99640.96381.07151.21961.38281.3909
TATA 0.01180.01980.0024-0.00050.03540.01030.01840.0111-0.00370.0014
M-score -2.52-2.27-2.44-2.49-2.30-2.50-2.40-2.57-2.66-2.62
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