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Fortune Brands Home & Security Inc (NYSE:FBHS)
Beneish M-Score
-2.69 (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 -2.69 suggests that the company is not a manipulator.

FBHS' s 10-Year Beneish M-Score Range
Min: -2.8   Max: -2.38
Current: -2.69

-2.8
-2.38

During the past 6 years, the highest Beneish M-Score of Fortune Brands Home & Security Inc was -2.38. The lowest was -2.80. 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 * 0.9845+0.528 * 1.0073+0.404 * 1.0413+0.892 * 1.0883+0.115 * 1.0098
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9841+4.679 * -0.0359-0.327 * 1.4099
=-2.69

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

This Year (Jun15) TTM:Last Year (Jun14) TTM:
Accounts Receivable was $574 Mil.
Revenue was 1165.1 + 950.8 + 940.3 + 1097.7 = $4,154 Mil.
Gross Profit was 410.4 + 316.9 + 317.1 + 378.3 = $1,423 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 $995 Mil.
Total Current Liabilities was $682 Mil.
Long-Term Debt was $1,390 Mil.
Net Income was 79.7 + 40 + 45.1 + -21.1 = $144 Mil.
Non Operating Income was -1.5 + -1.7 + -1.1 + 0.3 = $-4 Mil.
Cash Flow from Operations was 108.5 + -66.7 + 143.5 + 140.9 = $326 Mil.
Accounts Receivable was $535 Mil.
Revenue was 1027.2 + 889.1 + 855.7 + 1045 = $3,817 Mil.
Gross Profit was 361.8 + 295.3 + 300.8 + 358.9 = $1,317 Mil.
Total Current Assets was $1,337 Mil.
Total Assets was $4,190 Mil.
Property, Plant and Equipment(Net PPE) was $540 Mil.
Depreciation, Depletion and Amortization(DDA) was $95 Mil.
Selling, General & Admin. Expense(SGA) was $929 Mil.
Total Current Liabilities was $645 Mil.
Long-Term Debt was $595 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)
=(573.5 / 4153.9) / (535.3 / 3817)
=0.13806303 / 0.14024103
=0.9845

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)
=(316.9 / 3817) / (410.4 / 4153.9)
=0.34498297 / 0.34249741
=1.0073

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 - (1529.9 + 582) / 4966.5) / (1 - (1337.1 + 540.2) / 4190.1)
=0.57477097 / 0.55196773
=1.0413

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
=4153.9 / 3817
=1.0883

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))
=(95.2 / (95.2 + 540.2)) / (101.4 / (101.4 + 582))
=0.14982688 / 0.14837577
=1.0098

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)
=(994.6 / 4153.9) / (928.7 / 3817)
=0.23943764 / 0.24330626
=0.9841

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)
=((1389.8 + 682.3) / 4966.5) / ((595 + 644.9) / 4190.1)
=0.41721534 / 0.29591179
=1.4099

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
=(143.7 - -4 - 326.2) / 4966.5
=-0.0359

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 -2.69 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

Mar13Jun13Sep13Dec13Mar14Jun14Sep14Dec14Mar15Jun15
DSRI 1.04841.12631.14070.98921.08191.06271.04681.10380.94250.9845
GMI 0.91110.90410.92010.93360.95540.98190.98881.02031.01641.0073
AQI 0.93910.99830.99741.03391.01210.95910.94560.9580.95961.0413
SGI 1.0791.09521.11481.06681.04021.00780.98631.03221.04851.0883
DEPI 1.07541.12991.2721.02521.12131.04190.95191.04580.95371.0098
SGAI 0.99710.98580.96210.94150.93040.90230.9250.92570.94620.9841
LVGI 0.88281.00811.03721.08551.13171.16891.30141.2721.29561.4099
TATA -0.0291-0.0275-0.0342-0.01510.00590.0098-0.0159-0.0233-0.0447-0.0359
M-score -2.53-2.44-2.43-2.54-2.38-2.43-2.64-2.54-2.80-2.69
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