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Fortune Brands Home & Security Inc (NYSE:FBHS)
Beneish M-Score
-2.54 (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.

Fortune Brands Home & Security Inc has a M-score of -2.54 suggests that the company is not a manipulator.

FBHS' s 10-Year Beneish M-Score Range
Min: -2.64   Max: -2.54
Current: -2.54

-2.64
-2.54

During the past 6 years, the highest Beneish M-Score of Fortune Brands Home & Security Inc was -2.54. The lowest was -2.64. And the median was -2.54.


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 Fortune Brands Home & Security Inc 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 * 1.0526+0.528 * 1.0258+0.404 * 0.958+0.892 * 1.0823+0.115 * 1.0458
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9299+4.679 * -0.0233-0.327 * 1.272
=-2.54

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

This Year (Dec14) TTM:Last Year (Dec13) TTM:
Accounts Receivable was $459 Mil.
Revenue was 940.3 + 1097.7 + 1142.2 + 966.2 = $4,146 Mil.
Gross Profit was 317.1 + 378.3 + 400.4 + 314.7 = $1,411 Mil.
Total Current Assets was $1,299 Mil.
Total Assets was $4,053 Mil.
Property, Plant and Equipment(Net PPE) was $540 Mil.
Depreciation, Depletion and Amortization(DDA) was $99 Mil.
Selling, General & Admin. Expense(SGA) was $988 Mil.
Total Current Liabilities was $700 Mil.
Long-Term Debt was $644 Mil.
Net Income was 45.1 + -21.1 + 93.3 + 40.8 = $158 Mil.
Non Operating Income was -1.1 + 0.3 + -0.8 + 0.5 = $-1 Mil.
Cash Flow from Operations was 143.5 + 140.9 + 125.9 + -156.6 = $254 Mil.
Accounts Receivable was $403 Mil.
Revenue was 855.7 + 1045 + 1040.4 + 890 = $3,831 Mil.
Gross Profit was 300.8 + 358.9 + 377 + 300.2 = $1,337 Mil.
Total Current Assets was $1,327 Mil.
Total Assets was $4,178 Mil.
Property, Plant and Equipment(Net PPE) was $468 Mil.
Depreciation, Depletion and Amortization(DDA) was $90 Mil.
Selling, General & Admin. Expense(SGA) was $981 Mil.
Total Current Liabilities was $739 Mil.
Long-Term Debt was $350 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)
=(458.9 / 4146.4) / (402.8 / 3831.1)
=0.11067432 / 0.10513952
=1.0526

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)
=(378.3 / 3831.1) / (317.1 / 4146.4)
=0.34895983 / 0.34017461
=1.0258

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 - (1299.1 + 539.8) / 4052.9) / (1 - (1327.4 + 468.3) / 4178.1)
=0.54627551 / 0.57021134
=0.958

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
=4146.4 / 3831.1
=1.0823

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))
=(90.4 / (90.4 + 468.3)) / (98.8 / (98.8 + 539.8))
=0.16180419 / 0.15471344
=1.0458

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)
=(987.5 / 4146.4) / (981.2 / 3831.1)
=0.2381584 / 0.25611443
=0.9299

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)
=((643.7 + 699.6) / 4052.9) / ((350 + 738.7) / 4178.1)
=0.33144168 / 0.26057299
=1.272

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
=(158.1 - -1.1 - 253.7) / 4052.9
=-0.0233

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.

Fortune Brands Home & Security Inc has a M-score of -2.54 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.

Fortune Brands Home & Security Inc Annual Data

Dec09Dec10Dec11Dec12Dec13Dec14
DSRI 1.02321.0513
GMI 0.93171.0268
AQI 1.03390.958
SGI 1.03131.0837
DEPI 1.02521.0458
SGAI 0.93170.9273
LVGI 1.08551.272
TATA -0.015-0.0233
M-score -2.54-2.54

Fortune Brands Home & Security Inc Quarterly Data

Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14Dec14
DSRI 1.04841.12631.14070.98921.06061.01180.99721.0526
GMI 0.91110.90410.92010.93360.96060.98790.99481.0258
AQI 0.93910.99830.99741.03391.01210.95910.94560.958
SGI 1.0791.09521.11481.06681.06111.05851.03531.0823
DEPI 1.07541.12991.2721.02521.12131.04190.95191.0458
SGAI 0.99710.98580.96210.94150.93440.90530.92850.9299
LVGI 0.88281.00811.03721.08551.13171.16891.30141.272
TATA -0.0291-0.0275-0.0342-0.01510.00590.0097-0.0159-0.0233
M-score -2.53-2.44-2.43-2.54-2.38-2.43-2.64-2.54
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