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Fortune Brands Home & Security Inc (NYSE:FBHS)
Beneish M-Score
-2.42 (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 -2.42 suggests that the company is not a manipulator.

FBHS' s 10-Year Beneish M-Score Range
Min: -2.64   Max: -2.37
Current: -2.42

-2.64
-2.37

During the past 5 years, the highest Beneish M-Score of Fortune Brands Home & Security Inc was -2.37. The lowest was -2.64. And the median was -2.43.


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 * 0.9356+0.528 * 0.9945+0.404 * 0.9591+0.892 * 1.1447+0.115 * 1.0419
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.8901+4.679 * 0.0082-0.327 * 1.1689
=-2.42

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

This Year (Jun14) TTM:Last Year (Jun13) TTM:
Accounts Receivable was $535 Mil.
Revenue was 1142.2 + 966.2 + 1101.9 + 1125.1 = $4,335 Mil.
Gross Profit was 400.4 + 314.7 + 376.7 + 384.9 = $1,477 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 $1,041 Mil.
Total Current Liabilities was $645 Mil.
Long-Term Debt was $595 Mil.
Net Income was 93.3 + 40.8 + 64.2 + 64.2 = $263 Mil.
Non Operating Income was -0.8 + 0.5 + 6.6 + 0.5 = $7 Mil.
Cash Flow from Operations was 125.9 + -156.6 + 131.6 + 120.3 = $221 Mil.
Accounts Receivable was $500 Mil.
Revenue was 1040.4 + 890 + 947.9 + 909.1 = $3,787 Mil.
Gross Profit was 377 + 300.2 + 303.5 + 302.3 = $1,283 Mil.
Total Current Assets was $1,204 Mil.
Total Assets was $4,065 Mil.
Property, Plant and Equipment(Net PPE) was $522 Mil.
Depreciation, Depletion and Amortization(DDA) was $97 Mil.
Selling, General & Admin. Expense(SGA) was $1,021 Mil.
Total Current Liabilities was $672 Mil.
Long-Term Debt was $358 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)
=(535.3 / 4335.4) / (499.8 / 3787.4)
=0.12347188 / 0.13196388
=0.9356

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)
=(314.7 / 3787.4) / (400.4 / 4335.4)
=0.33875482 / 0.34061448
=0.9945

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 - (1337.1 + 540.2) / 4190.1) / (1 - (1203.6 + 522.2) / 4065.4)
=0.55196773 / 0.57549073
=0.9591

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
=4335.4 / 3787.4
=1.1447

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))
=(96.6 / (96.6 + 522.2)) / (95.2 / (95.2 + 540.2))
=0.1561086 / 0.14982688
=1.0419

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)
=(1040.6 / 4335.4) / (1021.3 / 3787.4)
=0.24002399 / 0.26965728
=0.8901

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)
=((595 + 644.9) / 4190.1) / ((357.5 + 671.7) / 4065.4)
=0.29591179 / 0.25316082
=1.1689

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
=(262.5 - 6.8 - 221.2) / 4190.1
=0.0082

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 -2.42 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

Dec09Dec10Dec11Dec12Dec13
DSRI 1.0794
GMI 0.9414
AQI 1.0053
SGI 1.1577
DEPI 1.1464
SGAI 0.9223
LVGI 1.0852
TATA -0.0166
M-score -2.37

Fortune Brands Home & Security Inc Quarterly Data

Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14
DSRI 1.04841.12631.11791.07940.97880.9356
GMI 0.91240.90640.91050.94140.96780.9945
AQI 0.93910.99830.99741.00531.01210.9591
SGI 1.0791.09521.13761.15771.14971.1447
DEPI 1.07541.12991.2721.14641.12131.0419
SGAI 0.99890.98850.95420.92230.91640.8901
LVGI 0.88281.00811.03721.08521.13171.1689
TATA -0.0291-0.0275-0.0342-0.01660.00440.0082
M-score -2.52-2.44-2.43-2.37-2.37-2.42
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