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Brady Corp (NYSE:BRC)
Beneish M-Score
-2.80 (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 -2.80 suggests that the company is not a manipulator.

BRC' s Beneish M-Score Range Over the Past 10 Years
Min: -3.65   Max: -2.09
Current: -2.8

-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 -2.65.


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 * 0.9788+0.528 * 0.9558+0.404 * 0.9788+0.892 * 0.9564+0.115 * 1.0891
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.002+4.679 * -0.0557-0.327 * 0.941
=-2.80

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

This Year (Jul16) TTM:Last Year (Jul15) TTM:
Accounts Receivable was $147 Mil.
Revenue was 282.106 + 286.816 + 268.63 + 283.073 = $1,121 Mil.
Gross Profit was 141.089 + 145.443 + 132.892 + 139.349 = $559 Mil.
Total Current Assets was $407 Mil.
Total Assets was $1,044 Mil.
Property, Plant and Equipment(Net PPE) was $102 Mil.
Depreciation, Depletion and Amortization(DDA) was $32 Mil.
Selling, General & Admin. Expense(SGA) was $405 Mil.
Total Current Liabilities was $167 Mil.
Long-Term Debt was $212 Mil.
Net Income was 25.136 + 20.981 + 15.29 + 18.703 = $80 Mil.
Non Operating Income was 0.321 + 0.721 + -0.992 + -0.759 = $-1 Mil.
Cash Flow from Operations was 40.426 + 40.296 + 27.884 + 30.37 = $139 Mil.
Accounts Receivable was $157 Mil.
Revenue was 288.636 + 290.227 + 282.628 + 310.24 = $1,172 Mil.
Gross Profit was 129.069 + 140.999 + 138.203 + 150.161 = $558 Mil.
Total Current Assets was $396 Mil.
Total Assets was $1,063 Mil.
Property, Plant and Equipment(Net PPE) was $111 Mil.
Depreciation, Depletion and Amortization(DDA) was $39 Mil.
Selling, General & Admin. Expense(SGA) was $423 Mil.
Total Current Liabilities was $209 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)
=(147.333 / 1120.625) / (157.386 / 1171.731)
=0.13147395 / 0.13431923
=0.9788

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)
=(558.432 / 1171.731) / (558.773 / 1120.625)
=0.4765872 / 0.49862621
=0.9558

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 - (407.424 + 102.444) / 1043.964) / (1 - (396.14 + 111.214) / 1062.897)
=0.51160385 / 0.52266871
=0.9788

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
=1120.625 / 1171.731
=0.9564

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))
=(39.458 / (39.458 + 111.214)) / (32.432 / (32.432 + 102.444))
=0.26188011 / 0.2404579
=1.0891

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)
=(405.096 / 1120.625) / (422.704 / 1171.731)
=0.36149113 / 0.36075174
=1.002

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)
=((211.982 + 166.727) / 1043.964) / ((200.774 + 208.992) / 1062.897)
=0.36276059 / 0.38551807
=0.941

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
=(80.11 - -0.709 - 138.976) / 1043.964
=-0.0557

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 -2.80 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

Jul07Jul08Jul09Jul10Jul11Jul12Jul13Jul14Jul15Jul16
DSRI 0.95290.98020.91791.11280.9690.88110.97760.98710.92620.9788
GMI 1.07060.98681.02260.96531.01061.01950.91341.05721.04410.9558
AQI 0.98680.95751.09810.91660.96970.99381.08670.93580.99940.9788
SGI 1.3381.11770.79361.04171.06390.98860.871.06330.95650.9564
DEPI 0.85170.89790.98990.99291.03241.02330.88661.1430.95261.0891
SGAI 0.99070.98791.00921.05360.95260.98521.14240.99440.97741.002
LVGI 1.07210.92660.86841.07830.41852.0021.12320.9871.07110.941
TATA -0.0174-0.0531-0.0368-0.0484-0.0337-0.1024-0.2096-0.1131-0.0858-0.0557
M-score -2.31-2.65-2.82-2.65-2.41-3.39-3.69-2.94-2.99-2.80

Brady Corp Quarterly Data

Apr14Jul14Oct14Jan15Apr15Jul15Oct15Jan16Apr16Jul16
DSRI 1.07811.08370.95320.88590.91210.92510.97611.07261.00610.9788
GMI 0.96480.99921.02731.0431.04011.04381.02461.02181.00240.9558
AQI 0.88680.93580.950.95840.95760.99940.98580.96050.95130.9788
SGI 0.9320.96850.99691.01720.99780.95770.93220.92730.93940.9564
DEPI 0.99091.1431.15841.14521.09070.95260.91750.9250.91231.0891
SGAI 1.08331.06541.0170.98940.96760.97620.98990.9861.01131.002
LVGI 1.09170.9871.0741.09051.0561.07111.01591.05061.02230.941
TATA -0.1686-0.1125-0.1184-0.1221-0.1224-0.0858-0.0923-0.1109-0.1154-0.0557
M-score -3.37-2.97-3.09-3.15-3.13-2.99-3.00-3.02-3.11-2.80
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