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Fortune Brands Home & Security Inc (NYSE:FBHS)
Beneish M-Score
-2.65 (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 -2.65 suggests that the company is not a manipulator.

FBHS' s Beneish M-Score Range Over the Past 10 Years
Min: -2.79   Max: -2.35
Current: -2.65

-2.79
-2.35

During the past 7 years, the highest Beneish M-Score of Fortune Brands Home & Security Inc was -2.35. The lowest was -2.79. 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 * 0.8592+0.528 * 0.9726+0.404 * 0.9938+0.892 * 1.1554+0.115 * 0.9137
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9362+4.679 * -0.0283-0.327 * 1.09
=-2.65

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

This Year (Jun16) TTM:Last Year (Jun15) TTM:
Accounts Receivable was $569 Mil.
Revenue was 1297.8 + 1106.5 + 1224.7 + 1238.8 = $4,868 Mil.
Gross Profit was 474.7 + 377.8 + 420.1 + 434.5 = $1,707 Mil.
Total Current Assets was $1,543 Mil.
Total Assets was $5,098 Mil.
Property, Plant and Equipment(Net PPE) was $643 Mil.
Depreciation, Depletion and Amortization(DDA) was $125 Mil.
Selling, General & Admin. Expense(SGA) was $1,082 Mil.
Total Current Liabilities was $718 Mil.
Long-Term Debt was $1,600 Mil.
Net Income was 125.2 + 55.7 + 87.8 + 107.5 = $376 Mil.
Non Operating Income was 0.4 + 0.3 + -0.6 + -0.5 = $-0 Mil.
Cash Flow from Operations was 185.4 + -20.4 + 147 + 208.7 = $521 Mil.
Accounts Receivable was $574 Mil.
Revenue was 1165.1 + 950.8 + 1039.6 + 1057.7 = $4,213 Mil.
Gross Profit was 410.4 + 316.9 + 341.8 + 368 = $1,437 Mil.
Total Current Assets was $1,530 Mil.
Total Assets was $4,967 Mil.
Property, Plant and Equipment(Net PPE) was $582 Mil.
Depreciation, Depletion and Amortization(DDA) was $101 Mil.
Selling, General & Admin. Expense(SGA) was $1,000 Mil.
Total Current Liabilities was $682 Mil.
Long-Term Debt was $1,390 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)
=(569.3 / 4867.8) / (573.5 / 4213.2)
=0.11695222 / 0.13611981
=0.8592

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)
=(1437.1 / 4213.2) / (1707.1 / 4867.8)
=0.34109465 / 0.3506923
=0.9726

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 - (1542.6 + 643.2) / 5097.9) / (1 - (1529.9 + 582) / 4966.5)
=0.57123521 / 0.57477097
=0.9938

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
=4867.8 / 4213.2
=1.1554

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))
=(101.4 / (101.4 + 582)) / (124.7 / (124.7 + 643.2))
=0.14837577 / 0.16239094
=0.9137

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)
=(1082.1 / 4867.8) / (1000.4 / 4213.2)
=0.22229755 / 0.23744422
=0.9362

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)
=((1600.4 + 717.9) / 5097.9) / ((1389.8 + 682.3) / 4966.5)
=0.45475588 / 0.41721534
=1.09

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
=(376.2 - -0.4 - 520.7) / 5097.9
=-0.0283

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 -2.65 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

Dec09Dec10Dec11Dec12Dec13Dec14Dec15
DSRI 0.89851.1710.89321.05130.9599
GMI 1.09130.9010.95021.02680.9859
AQI 1.12750.92951.03390.9581.0626
SGI 1.02940.94181.18141.08371.141
DEPI 0.96411.05471.02521.04580.9987
SGAI 1.05141.02670.910.92730.9734
LVGI 1.9480.88471.08551.2721.1933
TATA -0.0576-0.0425-0.015-0.0233-0.0188
M-score -3.04-2.61-2.51-2.54-2.52

Fortune Brands Home & Security Inc Quarterly Data

Mar14Jun14Sep14Dec14Mar15Jun15Sep15Dec15Mar16Jun16
DSRI 0.94790.93470.93471.08750.92880.97060.90820.95990.94780.8592
GMI 0.9761.00471.00911.02461.02071.01141.01180.98590.9820.9726
AQI 1.01210.95910.94560.9580.95961.04131.04841.06261.05920.9938
SGI 1.18731.14591.10461.04761.0641.10381.14741.1411.16191.1554
DEPI 1.12131.04190.95191.04580.95371.00981.02620.99870.95980.9137
SGAI 0.90990.88340.91610.91770.93810.97590.96850.97340.9630.9362
LVGI 1.13171.16891.30141.2721.29561.40991.24541.19331.41821.09
TATA 0.00590.0098-0.0159-0.0233-0.0448-0.0387-0.0257-0.0188-0.0252-0.0283
M-score -2.35-2.41-2.63-2.54-2.79-2.70-2.60-2.52-2.62-2.65
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