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Brown-Forman Corp (NYSE:BF.B)
Beneish M-Score
-2.30 (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 -2.30 suggests that the company is not a manipulator.

BF.B' s 10-Year Beneish M-Score Range
Min: -3.26   Max: -1.78
Current: -2.3

-3.26
-1.78

During the past 13 years, the highest Beneish M-Score of Brown-Forman Corp was -1.78. The lowest was -3.26. And the median was -2.47.


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 * 1.0005+0.528 * 0.99+0.404 * 0.9297+0.892 * 1.0434+0.115 * 1.1367
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0265+4.679 * 0.0354-0.327 * 0.9964
=-2.30

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

This Year (Oct14) TTM:Last Year (Oct13) TTM:
Accounts Receivable was $761 Mil.
Revenue was 877 + 705 + 689 + 782 = $3,053 Mil.
Gross Profit was 609 + 495 + 493 + 532 = $2,129 Mil.
Total Current Assets was $2,299 Mil.
Total Assets was $4,243 Mil.
Property, Plant and Equipment(Net PPE) was $556 Mil.
Depreciation, Depletion and Amortization(DDA) was $51 Mil.
Selling, General & Admin. Expense(SGA) was $1,161 Mil.
Total Current Liabilities was $678 Mil.
Long-Term Debt was $998 Mil.
Net Income was 208 + 150 + 133 + 177 = $668 Mil.
Non Operating Income was 0 + 0 + 0 + 0 = $0 Mil.
Cash Flow from Operations was -42 + 112 + 259 + 189 = $518 Mil.
Accounts Receivable was $729 Mil.
Revenue was 833 + 686 + 660 + 747 = $2,926 Mil.
Gross Profit was 576 + 477 + 460 + 507 = $2,020 Mil.
Total Current Assets was $2,033 Mil.
Total Assets was $3,882 Mil.
Property, Plant and Equipment(Net PPE) was $483 Mil.
Depreciation, Depletion and Amortization(DDA) was $51 Mil.
Selling, General & Admin. Expense(SGA) was $1,084 Mil.
Total Current Liabilities was $542 Mil.
Long-Term Debt was $997 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)
=(761 / 3053) / (729 / 2926)
=0.24926302 / 0.24914559
=1.0005

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)
=(495 / 2926) / (609 / 3053)
=0.69036227 / 0.69734687
=0.99

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 - (2299 + 556) / 4243) / (1 - (2033 + 483) / 3882)
=0.32712703 / 0.35188047
=0.9297

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
=3053 / 2926
=1.0434

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))
=(51 / (51 + 483)) / (51 / (51 + 556))
=0.09550562 / 0.08401977
=1.1367

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)
=(1161 / 3053) / (1084 / 2926)
=0.38028169 / 0.37047163
=1.0265

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)
=((998 + 678) / 4243) / ((997 + 542) / 3882)
=0.39500354 / 0.39644513
=0.9964

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
=(668 - 0 - 518) / 4243
=0.0354

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 -2.30 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

Apr05Apr06Apr07Apr08Apr09Apr10Apr11Apr12Apr13Apr14
DSRI 0.79220.9981.09630.96320.84311.14451.13290.68531.46350.989
GMI 0.96130.96631.00771.01711.03280.97420.97871.34220.72380.9877
AQI 1.0560.73571.56081.0710.95961.00550.88181.05650.97770.9131
SGI 1.07371.09341.14091.16410.96090.99521.04741.39750.78831.0498
DEPI 0.80841.03711.12420.85080.91980.91310.89761.14031.07441.1727
SGAI 1.02171.01590.99380.96330.96220.95951.00950.7651.33541.0101
LVGI 0.8880.90131.48040.82590.94070.8051.04710.79961.55410.9366
TATA -0.0612-0.02570.0042-0.0276-0.0104-0.03040.0121-0.00090.01490.0024
M-score -2.88-2.61-2.16-2.41-2.69-2.44-2.35-2.09-2.56-2.44

Brown-Forman Corp Quarterly Data

Jul12Oct12Jan13Apr13Jul13Oct13Jan14Apr14Jul14Oct14
DSRI 0.74480.7110.73651.26381.2811.49411.49511.14561.0421.0005
GMI 1.29321.45091.41750.83780.75290.65970.67180.8530.90960.99
AQI 1.03030.95710.97460.97770.99921.00410.98350.91310.89750.9297
SGI 1.34681.49311.51330.91280.80610.71590.71660.90640.96851.0434
DEPI 1.17231.20381.1761.08211.04881.05911.06431.16441.15691.1367
SGAI 0.78440.69640.69921.15371.31511.4731.44051.17081.08651.0265
LVGI 0.80490.7741.4081.55411.50221.49710.85180.93660.95110.9964
TATA 0.00080.00860.01060.01480.01190.01180.01980.0024-0.00050.0354
M-score -2.11-1.90-2.07-2.54-2.68-2.64-2.38-2.52-2.54-2.30
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