Switch to:
Brown-Forman Corp (NYSE:BF.B)
Beneish M-Score
-2.50 (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 -2.50 suggests that the company is not a manipulator.

BF.B' s 10-Year Beneish M-Score Range
Min: -3.26   Max: -1.78
Current: -2.5

-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 * 0.8922+0.528 * 0.9907+0.404 * 0.9541+0.892 * 1.0415+0.115 * 1.1078
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0228+4.679 * 0.0103-0.327 * 0.9638
=-2.50

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

This Year (Jan15) TTM:Last Year (Jan14) TTM:
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.
Net Income was 186 + 208 + 150 + 133 = $677 Mil.
Non Operating Income was 0 + 0 + 0 + 0 = $0 Mil.
Cash Flow from Operations was 305 + -42 + 112 + 259 = $634 Mil.
Accounts Receivable was $679 Mil.
Revenue was 782 + 833 + 686 + 660 = $2,961 Mil.
Gross Profit was 532 + 576 + 477 + 460 = $2,045 Mil.
Total Current Assets was $2,103 Mil.
Total Assets was $3,993 Mil.
Property, Plant and Equipment(Net PPE) was $497 Mil.
Depreciation, Depletion and Amortization(DDA) was $51 Mil.
Selling, General & Admin. Expense(SGA) was $1,088 Mil.
Total Current Liabilities was $604 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)
=(631 / 3084) / (679 / 2961)
=0.20460441 / 0.22931442
=0.8922

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)
=(609 / 2961) / (553 / 3084)
=0.69064505 / 0.69714656
=0.9907

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 - (2209 + 567) / 4161) / (1 - (2103 + 497) / 3993)
=0.33285268 / 0.34886051
=0.9541

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
=3084 / 2961
=1.0415

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 + 497)) / (52 / (52 + 567))
=0.09306569 / 0.08400646
=1.1078

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)
=(1159 / 3084) / (1088 / 2961)
=0.37581064 / 0.36744343
=1.0228

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)
=((748 + 860) / 4161) / ((997 + 604) / 3993)
=0.38644557 / 0.40095167
=0.9638

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
=(677 - 0 - 634) / 4161
=0.0103

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 -2.50 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 0.79220.9981.09630.96320.84311.14451.13290.90951.10270.989
GMI 0.96130.96631.00771.01711.03280.97420.97871.01130.96060.9877
AQI 1.0560.73571.56081.0710.95961.00550.88181.05650.97770.9131
SGI 1.07371.09341.14091.16410.96090.99521.04741.0531.04631.0498
DEPI 0.80841.03711.12420.85080.91980.91310.89761.14031.07441.1727
SGAI 1.02171.01590.99380.96330.96220.95951.00951.01541.00621.0101
LVGI 0.8880.90131.48040.82590.94070.8051.04710.79961.55410.9366
TATA -0.0612-0.02570.0042-0.0276-0.0104-0.02840.0121-0.00090.01490.0024
M-score -2.88-2.61-2.16-2.41-2.69-2.43-2.35-2.41-2.48-2.44

Brown-Forman Corp Quarterly Data

Oct12Jan13Apr13Jul13Oct13Jan14Apr14Jul14Oct14Jan15
DSRI 1.2261.26351.27841.07351.00431.01030.98970.96261.00050.8922
GMI 0.84130.8260.82810.89820.98170.99440.98750.98490.990.9907
AQI 0.95710.97460.97770.99921.00410.98350.91310.89750.92970.9541
SGI 0.8660.88210.90250.96191.06521.06041.04911.04841.04341.0415
DEPI 1.19471.16711.07441.06051.06721.07251.17271.15491.13671.1078
SGAI 1.20051.19931.16661.1030.99040.97371.01171.00341.02651.0228
LVGI 0.7741.4081.55411.50221.49710.85180.93660.95110.99640.9638
TATA 0.00840.01040.01460.01170.01180.01980.0024-0.00050.03540.0103
M-score -2.39-2.54-2.54-2.62-2.52-2.27-2.44-2.49-2.30-2.50
Get WordPress Plugins for easy affiliate links on Stock Tickers and Guru Names | Earn affiliate commissions by embedding GuruFocus Charts
GuruFocus Affiliate Program: Earn up to $400 per referral. ( Learn More)

GuruFocus Premium Plus Membership

FEEDBACK