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Brady Corp (NYSE:BRC)
Beneish M-Score
-3.07 (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 -3.07 suggests that the company is not a manipulator.

BRC' s 10-Year Beneish M-Score Range
Min: -3.64   Max: -1.86
Current: -3.07

-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 * 0.9235+0.528 * 1.0547+0.404 * 0.95+0.892 * 1.0289+0.115 * 1.1584
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9878+4.679 * -0.1184-0.327 * 1.074
=-3.07

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

This Year (Oct14) TTM:Last Year (Oct13) TTM:
Accounts Receivable was $175 Mil.
Revenue was 310.24 + 316.733 + 309.577 + 291.194 = $1,228 Mil.
Gross Profit was 150.161 + 154.06 + 155.12 + 142.536 = $602 Mil.
Total Current Assets was $453 Mil.
Total Assets was $1,222 Mil.
Property, Plant and Equipment(Net PPE) was $137 Mil.
Depreciation, Depletion and Amortization(DDA) was $44 Mil.
Selling, General & Admin. Expense(SGA) was $449 Mil.
Total Current Liabilities was $318 Mil.
Long-Term Debt was $153 Mil.
Net Income was 13.584 + -110.409 + 24.088 + 16.424 = $-56 Mil.
Non Operating Income was 0.323 + 0.515 + 0.872 + 0.255 = $2 Mil.
Cash Flow from Operations was 18.604 + 17.58 + 34.063 + 16.184 = $86 Mil.
Accounts Receivable was $184 Mil.
Revenue was 307.53 + 310.592 + 302.483 + 272.702 = $1,193 Mil.
Gross Profit was 157.847 + 157.871 + 159.401 + 141.891 = $617 Mil.
Total Current Assets was $550 Mil.
Total Assets was $1,484 Mil.
Property, Plant and Equipment(Net PPE) was $125 Mil.
Depreciation, Depletion and Amortization(DDA) was $49 Mil.
Selling, General & Admin. Expense(SGA) was $442 Mil.
Total Current Liabilities was $329 Mil.
Long-Term Debt was $204 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)
=(174.926 / 1227.744) / (184.099 / 1193.307)
=0.14247758 / 0.15427631
=0.9235

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)
=(154.06 / 1193.307) / (150.161 / 1227.744)
=0.5170589 / 0.49023005
=1.0547

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 - (452.683 + 136.583) / 1222.438) / (1 - (550.199 + 124.894) / 1484.36)
=0.51795837 / 0.54519591
=0.95

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
=1227.744 / 1193.307
=1.0289

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))
=(48.928 / (48.928 + 124.894)) / (43.843 / (43.843 + 136.583))
=0.28148336 / 0.24299713
=1.1584

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)
=(448.71 / 1227.744) / (441.529 / 1193.307)
=0.36547521 / 0.37000453
=0.9878

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)
=((153.476 + 318.496) / 1222.438) / ((204.413 + 329.189) / 1484.36)
=0.38609075 / 0.35948287
=1.074

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
=(-56.313 - 1.965 - 86.431) / 1222.438
=-0.1184

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 -3.07 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

Jul12Oct12Jan13Apr13Jul13Oct13Jan14Apr14Jul14Oct14
DSRI 0.76850.90171.05840.77080.88290.79310.64980.90780.9910.9235
GMI 1.08141.0281.00141.04710.97531.03071.07131.07221.05761.0547
AQI 0.99380.97611.27071.27721.08671.0850.90240.88680.93580.95
SGI 1.13331.03951.0031.09210.96341.06361.12821.10691.05911.0289
DEPI 1.02331.0271.13650.98760.88660.89380.79780.99091.1431.1584
SGAI 0.91330.97261.02921.01851.07941.0340.96580.96360.99790.9878
LVGI 2.0020.96081.0510.9911.12321.11610.94741.09170.9871.074
TATA -0.1024-0.1062-0.0505-0.0605-0.2093-0.2092-0.1926-0.1691-0.1131-0.1184
M-score -3.32-3.01-2.56-2.76-3.64-3.60-3.59-3.29-2.94-3.07
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