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Brady Corp (NYSE:BRC)
Beneish M-Score
-3.11 (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 -3.11 suggests that the company is not a manipulator.

BRC' s Beneish M-Score Range Over the Past 10 Years
Min: -3.65   Max: -1.85
Current: -3.11

-3.65
-1.85

During the past 13 years, the highest Beneish M-Score of Brady Corp was -1.85. The lowest was -3.65. And the median was -2.61.


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 * 1.0061+0.528 * 1.0024+0.404 * 0.9513+0.892 * 0.9394+0.115 * 0.9123
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0113+4.679 * -0.1154-0.327 * 1.0223
=-3.11

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

This Year (Apr16) TTM:Last Year (Apr15) TTM:
Accounts Receivable was $153 Mil.
Revenue was 286.816 + 268.63 + 283.073 + 288.636 = $1,127 Mil.
Gross Profit was 145.443 + 132.892 + 139.349 + 129.069 = $547 Mil.
Total Current Assets was $429 Mil.
Total Assets was $1,061 Mil.
Property, Plant and Equipment(Net PPE) was $100 Mil.
Depreciation, Depletion and Amortization(DDA) was $36 Mil.
Selling, General & Admin. Expense(SGA) was $410 Mil.
Total Current Liabilities was $164 Mil.
Long-Term Debt was $236 Mil.
Net Income was 20.981 + 15.29 + 18.703 + -39.394 = $16 Mil.
Non Operating Income was 0.721 + -0.992 + -0.759 + -0.123 = $-1 Mil.
Cash Flow from Operations was 40.296 + 27.884 + 30.37 + 40.608 = $139 Mil.
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.



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)
=(153.289 / 1127.155) / (162.18 / 1199.828)
=0.13599638 / 0.13516937
=1.0061

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)
=(583.423 / 1199.828) / (546.753 / 1127.155)
=0.48625553 / 0.48507348
=1.0024

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 - (429.433 + 99.769) / 1061.275) / (1 - (416.335 + 123.778) / 1141.985)
=0.50135262 / 0.5270402
=0.9513

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
=1127.155 / 1199.828
=0.9394

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))
=(39.327 / (39.327 + 123.778)) / (35.843 / (35.843 + 99.769))
=0.24111462 / 0.26430552
=0.9123

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)
=(409.586 / 1127.155) / (431.135 / 1199.828)
=0.36338037 / 0.35933067
=1.0113

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)
=((236.31 + 163.782) / 1061.275) / ((213.839 + 207.276) / 1141.985)
=0.37699183 / 0.36875703
=1.0223

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
=(15.58 - -1.153 - 139.158) / 1061.275
=-0.1154

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 -3.11 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

Jul06Jul07Jul08Jul09Jul10Jul11Jul12Jul13Jul14Jul15
DSRI 1.22020.95290.98020.91791.11280.9690.88110.97760.98710.9262
GMI 1.0281.07060.98681.02260.96531.01061.01950.91341.05721.0441
AQI 1.06170.98680.95751.09810.91660.96970.99381.08670.93580.977
SGI 1.24741.3381.11770.79361.04171.06390.98860.871.06330.9565
DEPI 1.06680.85170.89790.98990.99291.03241.02330.88661.1430.9526
SGAI 0.95050.99070.98791.00921.05360.95260.98521.14240.99440.9774
LVGI 1.13921.07210.92660.86840.46810.96412.0021.12320.9871.0717
TATA -0.0096-0.0174-0.0531-0.0368-0.0484-0.0337-0.1024-0.2096-0.1131-0.0858
M-score -2.09-2.31-2.65-2.82-2.45-2.59-3.39-3.69-2.94-3.00

Brady Corp Quarterly Data

Jan14Apr14Jul14Oct14Jan15Apr15Jul15Oct15Jan16Apr16
DSRI 0.65150.91010.9910.92350.89570.92460.92620.97611.07261.0061
GMI 1.0711.0721.05761.05471.041.03491.04411.02461.02181.0024
AQI 0.90240.88680.93580.950.95840.95760.9770.98580.96050.9513
SGI 1.12531.10411.05911.02891.00610.98440.95650.93220.92730.9394
DEPI 0.79780.99091.1431.15841.14521.09070.95260.91750.9250.9123
SGAI 0.96790.96570.99790.98780.99810.97810.97740.98990.9861.0113
LVGI 0.94741.09170.9871.0741.09051.0561.07171.01591.05061.0223
TATA -0.1926-0.1691-0.1131-0.1184-0.1221-0.1224-0.0858-0.0923-0.1109-0.1154
M-score -3.59-3.29-2.94-3.07-3.15-3.14-3.00-3.00-3.02-3.11
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