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Brown-Forman Corp (NYSE:BF.B)
Beneish M-Score
-2.66 (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 -2.66 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: -2.66

-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 * 0.9393+0.528 * 1.0043+0.404 * 0.9569+0.892 * 1.017+0.115 * 1.0653
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9426+4.679 * -0.0037-0.327 * 1.3828
=-2.66

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

This Year (Oct15) TTM:Last Year (Oct14) TTM:
Accounts Receivable was $727 Mil.
Revenue was 854 + 699 + 739 + 813 = $3,105 Mil.
Gross Profit was 586 + 491 + 526 + 553 = $2,156 Mil.
Total Current Assets was $2,348 Mil.
Total Assets was $4,319 Mil.
Property, Plant and Equipment(Net PPE) was $619 Mil.
Depreciation, Depletion and Amortization(DDA) was $53 Mil.
Selling, General & Admin. Expense(SGA) was $1,113 Mil.
Total Current Liabilities was $1,130 Mil.
Long-Term Debt was $1,229 Mil.
Net Income was 200 + 156 + 141 + 186 = $683 Mil.
Non Operating Income was 0 + 0 + 0 + 0 = $0 Mil.
Cash Flow from Operations was 14 + 147 + 233 + 305 = $699 Mil.
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.



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)
=(727 / 3105) / (761 / 3053)
=0.23413849 / 0.24926302
=0.9393

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)
=(491 / 3053) / (586 / 3105)
=0.69734687 / 0.69436393
=1.0043

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 - (2348 + 619) / 4319) / (1 - (2299 + 556) / 4243)
=0.31303542 / 0.32712703
=0.9569

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
=3105 / 3053
=1.017

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 + 556)) / (53 / (53 + 619))
=0.08401977 / 0.07886905
=1.0653

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)
=(1113 / 3105) / (1161 / 3053)
=0.35845411 / 0.38028169
=0.9426

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 + 1130) / 4319) / ((998 + 678) / 4243)
=0.54619125 / 0.39500354
=1.3828

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
=(683 - 0 - 699) / 4319
=-0.0037

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 -2.66 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 0.9981.09630.96320.84311.14451.13290.90951.10270.9890.9779
GMI 0.96631.00771.01711.03280.97420.97871.01130.96060.98770.9974
AQI 0.73571.56081.0710.95961.00550.88181.05650.97770.91310.9457
SGI 1.09341.14091.16410.96090.99521.04741.0531.04631.04981.0478
DEPI 1.03711.12420.85080.91980.91310.89761.14031.07441.17271.0842
SGAI 1.01590.99380.96330.96220.95951.00951.01541.00621.01010.9646
LVGI 0.90131.48040.82590.94070.8051.04710.79961.55410.93661.0715
TATA -0.02570.0042-0.0276-0.0104-0.02840.0121-0.00090.01490.00240.0181
M-score -2.61-2.16-2.41-2.69-2.43-2.35-2.41-2.48-2.44-2.40

Brown-Forman Corp Quarterly Data

Jul13Oct13Jan14Apr14Jul14Oct14Jan15Apr15Jul15Oct15
DSRI 1.07351.00431.01030.98970.96261.00050.89220.97750.88810.9393
GMI 0.89820.98170.99440.98750.98490.990.99070.997711.0043
AQI 0.99921.00410.98350.91310.89750.92970.95410.94570.940.9569
SGI 0.96191.06521.06041.04911.04841.04341.04151.04821.03951.017
DEPI 1.06051.06721.07251.17271.15491.13671.10781.08421.11881.0653
SGAI 1.1030.99040.97371.01171.00341.02651.02280.96250.95770.9426
LVGI 1.50221.49710.85180.93660.95110.99640.96381.07151.21961.3828
TATA 0.01170.01180.01980.0024-0.00050.03540.01030.01840.0111-0.0037
M-score -2.62-2.52-2.27-2.44-2.49-2.30-2.50-2.40-2.57-2.66
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