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Brady Corp (NYSE:BRC)
Beneish M-Score
-3.14 (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 -3.14 suggests that the company is not a manipulator.

BRC' s 10-Year Beneish M-Score Range
Min: -3.64   Max: -1.86
Current: -3.14

-3.64
-1.86

During the past 13 years, the highest Beneish M-Score of Brady Corp was -1.86. The lowest was -3.64. And the median was -2.59.


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 * 0.9246+0.528 * 1.0349+0.404 * 0.9576+0.892 * 0.9844+0.115 * 1.0907
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9781+4.679 * -0.1224-0.327 * 1.056
=-3.14

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

This Year (Apr15) TTM:Last Year (Apr14) TTM:
Accounts Receivable was $162 Mil.
Revenue was 290.227 + 282.628 + 310.24 + 316.733 = $1,200 Mil.
Gross Profit was 140.999 + 138.203 + 150.161 + 154.06 = $583 Mil.
Total Current Assets was $416 Mil.
Total Assets was $1,142 Mil.
Property, Plant and Equipment(Net PPE) was $124 Mil.
Depreciation, Depletion and Amortization(DDA) was $39 Mil.
Selling, General & Admin. Expense(SGA) was $431 Mil.
Total Current Liabilities was $207 Mil.
Long-Term Debt was $214 Mil.
Net Income was 17.213 + 11.584 + 13.584 + -110.409 = $-68 Mil.
Non Operating Income was 0.434 + 0.211 + 0.323 + 0.515 = $1 Mil.
Cash Flow from Operations was 28.81 + 5.326 + 18.604 + 17.58 = $70 Mil.
Accounts Receivable was $178 Mil.
Revenue was 309.577 + 291.194 + 307.53 + 310.592 = $1,219 Mil.
Gross Profit was 155.12 + 142.536 + 157.847 + 157.871 = $613 Mil.
Total Current Assets was $522 Mil.
Total Assets was $1,452 Mil.
Property, Plant and Equipment(Net PPE) was $130 Mil.
Depreciation, Depletion and Amortization(DDA) was $46 Mil.
Selling, General & Admin. Expense(SGA) was $448 Mil.
Total Current Liabilities was $344 Mil.
Long-Term Debt was $162 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)
=(162.18 / 1199.828) / (178.197 / 1218.893)
=0.13516937 / 0.14619577
=0.9246

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)
=(138.203 / 1218.893) / (140.999 / 1199.828)
=0.50322219 / 0.48625553
=1.0349

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 - (416.335 + 123.778) / 1141.985) / (1 - (522.482 + 130.227) / 1451.674)
=0.5270402 / 0.55037495
=0.9576

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
=1199.828 / 1218.893
=0.9844

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))
=(46.47 / (46.47 + 130.227)) / (39.327 / (39.327 + 123.778))
=0.26299258 / 0.24111462
=1.0907

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)
=(431.135 / 1199.828) / (447.809 / 1218.893)
=0.35933067 / 0.36738992
=0.9781

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)
=((213.839 + 207.276) / 1141.985) / ((162.468 + 344.467) / 1451.674)
=0.36875703 / 0.34920719
=1.056

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
=(-68.028 - 1.483 - 70.32) / 1141.985
=-0.1224

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 -3.14 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 0.96361.22020.95290.98020.91791.11281.22540.86340.78510.9919
GMI 0.96961.0281.07060.98681.02260.96530.89191.0061.04821.0577
AQI 1.03531.06170.98680.95751.09810.91660.96970.99381.08670.9358
SGI 1.21641.24741.3381.11770.79361.04170.84141.00881.08341.0581
DEPI 0.88691.06680.85170.89790.98990.99291.03241.02330.88661.143
SGAI 0.94660.95050.99070.98791.00921.05361.08380.97891.00610.9988
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 -2.52-2.09-2.31-2.65-2.82-2.65-2.61-3.05-3.58-2.94

Brady Corp Quarterly Data

Jan13Apr13Jul13Oct13Jan14Apr14Jul14Oct14Jan15Apr15
DSRI 1.05840.77080.88290.79310.64980.90780.9910.92350.89570.9246
GMI 1.00141.04710.97531.03071.07131.07221.05761.05471.041.0349
AQI 1.27071.27721.08671.0850.90240.88680.93580.950.95840.9576
SGI 1.0031.09210.96341.06361.12821.10691.05911.02891.00610.9844
DEPI 1.13650.98760.88660.89380.79780.99091.1431.15841.14521.0907
SGAI 1.02921.01851.07941.0340.96580.96360.99790.98780.99810.9781
LVGI 1.0510.9911.12321.11610.94741.09170.9871.0741.09051.056
TATA -0.0505-0.0605-0.2093-0.2092-0.1926-0.1691-0.1131-0.1184-0.1221-0.1224
M-score -2.56-2.76-3.64-3.60-3.59-3.29-2.94-3.07-3.15-3.14
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