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Brady Corp (NYSE:BRC)
Beneish M-Score
-2.97 (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 Corp has a M-score of -2.97 suggests that the company is not a manipulator.

BRC' s 10-Year Beneish M-Score Range
Min: -3.65   Max: -2.09
Current: -2.97

-3.65
-2.09

During the past 13 years, the highest Beneish M-Score of Brady Corp was -2.09. The lowest was -3.65. And the median was -2.60.


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 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 * 1.0837+0.528 * 0.9992+0.404 * 0.9358+0.892 * 0.9685+0.115 * 1.143
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0654+4.679 * -0.1125-0.327 * 0.987
=-2.97

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

This Year (Jul14) TTM:Last Year (Jul13) TTM:
Accounts Receivable was $178 Mil.
Revenue was 316.733 + 309.577 + 291.194 + 305.974 = $1,223 Mil.
Gross Profit was 154.06 + 155.12 + 142.536 + 156.945 = $609 Mil.
Total Current Assets was $464 Mil.
Total Assets was $1,254 Mil.
Property, Plant and Equipment(Net PPE) was $134 Mil.
Depreciation, Depletion and Amortization(DDA) was $45 Mil.
Selling, General & Admin. Expense(SGA) was $452 Mil.
Total Current Liabilities was $292 Mil.
Long-Term Debt was $159 Mil.
Net Income was -110.409 + 24.088 + 16.424 + 23.928 = $-46 Mil.
Non Operating Income was 0.515 + 0.872 + 0.255 + 0 = $2 Mil.
Cash Flow from Operations was 17.58 + 34.063 + 16.184 + 25.593 = $93 Mil.
Accounts Receivable was $169 Mil.
Revenue was 295.701 + 305.737 + 324.182 + 337.646 = $1,263 Mil.
Gross Profit was 153.56 + 159.706 + 150.052 + 164.62 = $628 Mil.
Total Current Assets was $512 Mil.
Total Assets was $1,439 Mil.
Property, Plant and Equipment(Net PPE) was $122 Mil.
Depreciation, Depletion and Amortization(DDA) was $49 Mil.
Selling, General & Admin. Expense(SGA) was $438 Mil.
Total Current Liabilities was $323 Mil.
Long-Term Debt was $201 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)
=(177.648 / 1223.478) / (169.261 / 1263.266)
=0.14519918 / 0.13398682
=1.0837

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)
=(155.12 / 1263.266) / (154.06 / 1223.478)
=0.49707504 / 0.49748422
=0.9992

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 - (463.842 + 134.171) / 1253.665) / (1 - (512.49 + 122.158) / 1438.683)
=0.5229882 / 0.55886877
=0.9358

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
=1223.478 / 1263.266
=0.9685

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))
=(48.725 / (48.725 + 122.158)) / (44.598 / (44.598 + 134.171))
=0.28513661 / 0.24947278
=1.143

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)
=(452.118 / 1223.478) / (438.181 / 1263.266)
=0.36953505 / 0.34686361
=1.0654

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)
=((159.296 + 291.945) / 1253.665) / ((201.15 + 323.497) / 1438.683)
=0.35993746 / 0.36467172
=0.987

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
=(-45.969 - 1.642 - 93.42) / 1253.665
=-0.1125

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 Corp has a M-score of -2.97 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 Corp Annual Data

Jul05Jul06Jul07Jul08Jul09Jul10Jul11Jul12Jul13Jul14
DSRI 0.96361.22020.95290.98020.91791.11280.9690.88110.97760.9871
GMI 0.96961.0281.07060.98681.02260.96531.01061.01950.91341.0572
AQI 1.03531.06170.98680.95751.09810.91660.96970.99381.08670.9358
SGI 1.21641.24741.3381.11770.79361.04171.06390.98860.871.0633
DEPI 0.88691.06680.85170.89790.98990.99291.03241.02330.88661.143
SGAI 0.94660.95050.99070.98791.00921.05360.95260.98521.14240.9944
LVGI 0.93191.13921.07210.92660.86841.07830.87870.95361.12320.987
TATA -0.0453-0.0096-0.0174-0.0531-0.0368-0.0484-0.0337-0.1024-0.2096-0.1131
M-score -2.52-2.09-2.31-2.65-2.82-2.65-2.56-3.05-3.69-2.94

Brady Corp Quarterly Data

Apr12Jul12Oct12Jan13Apr13Jul13Oct13Jan14Apr14Jul14
DSRI 0.87720.88110.9711.08990.87740.89160.89890.80491.07811.0837
GMI 1.02511.01951.00561.01110.98480.96660.95780.93620.96480.9992
AQI 0.93380.99380.97611.27071.27721.08671.0850.90240.88680.9358
SGI 1.01930.98860.96530.9740.95930.95390.93840.91080.9320.9685
DEPI 1.02251.02331.0271.13650.98760.88660.89380.79780.99091.143
SGAI 0.95930.98521.00821.02341.07231.06751.09781.1111.08331.0654
LVGI 0.90612.0020.96081.0510.9911.12321.11610.94741.09170.987
TATA -0.0959-0.1024-0.1064-0.0507-0.0608-0.2096-0.2087-0.1921-0.1686-0.1125
M-score -3.00-3.39-3.03-2.55-2.82-3.65-3.66-3.74-3.37-2.97
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