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Brady Corp (NYSE:BRC)
Beneish M-Score
-3.37 (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 -3.37 suggests that the company is not a manipulator.

BRC' s 10-Year Beneish M-Score Range
Min: -3.74   Max: -1.92
Current: -3.37

-3.74
-1.92

During the past 13 years, the highest Beneish M-Score of Brady Corp was -1.92. The lowest was -3.74. 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 * 1.0781+0.528 * 0.9648+0.404 * 0.8868+0.892 * 0.932+0.115 * 0.9909
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0833+4.679 * -0.1686-0.327 * 1.0917
=-3.37

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

This Year (Apr14) TTM:Last Year (Apr13) TTM:
Accounts Receivable was $178 Mil.
Revenue was 309.577 + 291.194 + 305.974 + 295.701 = $1,202 Mil.
Gross Profit was 155.12 + 142.536 + 156.945 + 153.56 = $608 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 $447 Mil.
Total Current Liabilities was $344 Mil.
Long-Term Debt was $162 Mil.
Net Income was 24.088 + 16.424 + 23.928 + -177.271 = $-113 Mil.
Non Operating Income was 0.872 + 0.255 + 0 + 1.095 = $2 Mil.
Cash Flow from Operations was 34.063 + 16.184 + 25.593 + 53.873 = $130 Mil.
Accounts Receivable was $177 Mil.
Revenue was 305.737 + 324.182 + 337.646 + 322.548 = $1,290 Mil.
Gross Profit was 159.706 + 150.052 + 164.62 + 155.123 = $630 Mil.
Total Current Assets was $504 Mil.
Total Assets was $1,681 Mil.
Property, Plant and Equipment(Net PPE) was $134 Mil.
Depreciation, Depletion and Amortization(DDA) was $47 Mil.
Selling, General & Admin. Expense(SGA) was $442 Mil.
Total Current Liabilities was $319 Mil.
Long-Term Debt was $218 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)
=(178.197 / 1202.446) / (177.343 / 1290.113)
=0.14819543 / 0.13746315
=1.0781

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)
=(142.536 / 1290.113) / (155.12 / 1202.446)
=0.48794253 / 0.50576991
=0.9648

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 - (522.482 + 130.227) / 1451.674) / (1 - (504.067 + 133.649) / 1680.968)
=0.55037495 / 0.62062573
=0.8868

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
=1202.446 / 1290.113
=0.932

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))
=(47.103 / (47.103 + 133.649)) / (46.47 / (46.47 + 130.227))
=0.26059463 / 0.26299258
=0.9909

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)
=(446.531 / 1202.446) / (442.25 / 1290.113)
=0.37135223 / 0.34279943
=1.0833

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)
=((162.468 + 344.467) / 1451.674) / ((218.378 + 319.3) / 1680.968)
=0.34920719 / 0.31986213
=1.0917

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
=(-112.831 - 2.222 - 129.713) / 1451.674
=-0.1686

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 -3.37 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

Jul04Jul05Jul06Jul07Jul08Jul09Jul10Jul11Jul12Jul13
DSRI 1.08610.96361.22020.95290.98020.91791.11280.9690.88110.9776
GMI 0.9790.97231.0281.07060.98681.02260.96531.01061.01950.9134
AQI 1.48711.031.06170.98680.95751.09810.91660.96970.99381.0867
SGI 1.20971.21641.24741.3381.11770.79361.04171.06390.98860.87
DEPI 0.97720.88691.06680.85170.89790.98990.99291.03241.02330.8866
SGAI 0.93330.94730.95050.99070.98791.00921.05360.95260.98521.1424
LVGI 1.90480.93941.13921.07210.92660.86841.07830.87870.95361.1232
TATA -0.048-0.0453-0.0096-0.0174-0.0531-0.0368-0.0484-0.0337-0.1024-0.2096
M-score -2.54-2.52-2.09-2.31-2.65-2.82-2.65-2.56-3.05-3.69

Brady Corp Quarterly Data

Jan12Apr12Jul12Oct12Jan13Apr13Jul13Oct13Jan14Apr14
DSRI 0.86730.87720.88110.9711.08990.87740.89160.89890.80491.0781
GMI 1.01861.02511.01951.00561.01110.98480.96660.95780.93620.9648
AQI 0.92840.93380.99380.97611.27071.27721.08671.0850.90240.8868
SGI 1.03661.01930.98860.96530.9740.95930.95390.93840.91080.932
DEPI 1.04191.02251.02331.0271.13650.98760.88660.89380.79780.9909
SGAI 0.96980.95930.98521.00821.02341.07231.06751.09781.1111.0833
LVGI 0.92320.90612.0020.96081.0510.9911.12321.11610.94741.0917
TATA -0.0915-0.0959-0.1024-0.1064-0.0507-0.0608-0.2096-0.2087-0.1921-0.1686
M-score -2.98-3.00-3.39-3.03-2.55-2.82-3.65-3.66-3.74-3.37
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