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Brady Corporation (NYSE:BRC)
Beneish M-Score
-3.60 (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.

Brady Corporation has a M-score of -3.71 suggests that the company is not a manipulator.

BRC' s 10-Year Beneish M-Score Range
Min: -3.65   Max: -1.86
Current: -3.6

-3.65
-1.86

During the past 13 years, the highest Beneish M-Score of Brady Corporation was -1.86. The lowest was -3.65. And the median was -2.58.


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 Brady Corporation 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 * 0.7734+0.528 * 0.9617+0.404 * 0.9024+0.892 * 0.9479+0.115 * 0.7978
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0726+4.679 * -0.1921-0.327 * 0.9474
=-3.71

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

This Year (Jan14) TTM:Last Year (Jan13) TTM:
Accounts Receivable was $168 Mil.
Revenue was 291.194 + 305.974 + 295.701 + 305.737 = $1,199 Mil.
Gross Profit was 142.536 + 156.945 + 153.56 + 159.706 = $613 Mil.
Total Current Assets was $520 Mil.
Total Assets was $1,438 Mil.
Property, Plant and Equipment(Net PPE) was $125 Mil.
Depreciation, Depletion and Amortization(DDA) was $49 Mil.
Selling, General & Admin. Expense(SGA) was $442 Mil.
Total Current Liabilities was $290 Mil.
Long-Term Debt was $203 Mil.
Net Income was 16.424 + 23.928 + -177.271 + 4.233 = $-133 Mil.
Non Operating Income was 0.255 + 0 + 1.095 + 1.131 = $2 Mil.
Cash Flow from Operations was 16.184 + 25.593 + 53.873 + 45.436 = $141 Mil.
Accounts Receivable was $229 Mil.
Revenue was 272.702 + 337.646 + 322.548 + 331.629 = $1,265 Mil.
Gross Profit was 141.891 + 164.62 + 155.123 + 160.047 = $622 Mil.
Total Current Assets was $543 Mil.
Total Assets was $1,786 Mil.
Property, Plant and Equipment(Net PPE) was $151 Mil.
Depreciation, Depletion and Amortization(DDA) was $44 Mil.
Selling, General & Admin. Expense(SGA) was $435 Mil.
Total Current Liabilities was $381 Mil.
Long-Term Debt was $264 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)
=(168.037 / 1198.606) / (229.219 / 1264.525)
=0.14019369 / 0.18126886
=0.7734

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)
=(156.945 / 1264.525) / (142.536 / 1198.606)
=0.49163204 / 0.51121636
=0.9617

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 - (519.897 + 124.516) / 1438.04) / (1 - (543.017 + 150.742) / 1785.969)
=0.55188103 / 0.61155037
=0.9024

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
=1198.606 / 1264.525
=0.9479

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))
=(43.857 / (43.857 + 150.742)) / (49.021 / (49.021 + 124.516))
=0.22537115 / 0.28248155
=0.7978

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)
=(442.013 / 1198.606) / (434.744 / 1264.525)
=0.36877256 / 0.34380024
=1.0726

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)
=((203.063 + 289.651) / 1438.04) / ((264.417 + 381.477) / 1785.969)
=0.34262886 / 0.36164905
=0.9474

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
=(-132.686 - 2.481 - 141.086) / 1438.04
=-0.1921

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.

Brady Corporation has a M-score of -3.71 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.

Brady Corporation Annual Data

Jul04Jul05Jul06Jul07Jul08Jul09Jul10Jul11Jul12Jul13
DSRI 1.08610.96361.22020.95290.98020.91791.11281.22540.69680.9776
GMI 0.97780.96961.0281.07060.98681.02260.96530.89191.15510.9134
AQI 1.47941.03531.06170.98680.95751.09810.91660.96970.99381.0867
SGI 1.20971.21641.24741.3381.11770.79361.04170.84141.25010.87
DEPI 0.96440.88691.06680.85170.89790.98990.99291.03241.02330.8866
SGAI 0.93310.94660.95050.99070.98791.00921.05361.08380.8661.1424
LVGI 1.92010.93191.13921.07210.92660.86841.07830.87870.95361.1232
TATA -0.0535-0.0453-0.0096-0.0174-0.0531-0.0368-0.0484-0.0337-0.1024-0.2096
M-score -2.58-2.52-2.09-2.31-2.65-2.82-2.65-2.61-2.89-3.69

Brady Corporation Quarterly Data

Oct11Jan12Apr12Jul12Oct12Jan13Apr13Jul13Oct13Jan14
DSRI 1.13141.09431.10820.69680.77080.8990.72340.92950.93810.7734
GMI 0.90590.90140.90731.15511.13571.11231.08230.93950.930.9617
AQI 0.97270.92840.93380.99380.97611.27071.27721.08671.0850.9024
SGI 0.84970.82160.80691.25011.2161.18091.16350.91510.89920.9479
DEPI 1.03271.04191.02251.02331.0271.13650.98760.88660.89380.7978
SGAI 1.07051.09981.08690.8660.88980.93470.98121.10761.14031.0726
LVGI 0.8890.92320.90612.0020.96081.0510.9911.12321.11610.9474
TATA -0.0298-0.0915-0.0959-0.1024-0.1064-0.0507-0.0608-0.2096-0.2087-0.1921
M-score -2.67-3.05-3.06-3.24-2.90-2.47-2.71-3.67-3.68-3.71
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