Switch to:
Fortune Brands Home & Security Inc (NYSE:FBHS)
Beneish M-Score
-2.62 (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 -2.62 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: -2.62

-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 -2.53.


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 * 0.9478+0.528 * 0.982+0.404 * 1.0592+0.892 * 1.1619+0.115 * 0.9598
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.963+4.679 * -0.0252-0.327 * 1.4182
=-2.62

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

This Year (Mar16) TTM:Last Year (Mar15) TTM:
Accounts Receivable was $526 Mil.
Revenue was 1106.5 + 1224.7 + 1238.8 + 1165.1 = $4,735 Mil.
Gross Profit was 377.8 + 420.1 + 434.5 + 410.4 = $1,643 Mil.
Total Current Assets was $1,481 Mil.
Total Assets was $4,943 Mil.
Property, Plant and Equipment(Net PPE) was $636 Mil.
Depreciation, Depletion and Amortization(DDA) was $122 Mil.
Selling, General & Admin. Expense(SGA) was $1,076 Mil.
Total Current Liabilities was $685 Mil.
Long-Term Debt was $1,619 Mil.
Net Income was 55.7 + 87.8 + 107.5 + 79.7 = $331 Mil.
Non Operating Income was 0.3 + -0.6 + -0.5 + -1.5 = $-2 Mil.
Cash Flow from Operations was -20.4 + 147 + 222.3 + 108.5 = $457 Mil.
Accounts Receivable was $477 Mil.
Revenue was 950.8 + 1039.6 + 1057.7 + 1027.2 = $4,075 Mil.
Gross Profit was 316.9 + 341.8 + 368 + 361.8 = $1,389 Mil.
Total Current Assets was $1,337 Mil.
Total Assets was $4,085 Mil.
Property, Plant and Equipment(Net PPE) was $544 Mil.
Depreciation, Depletion and Amortization(DDA) was $99 Mil.
Selling, General & Admin. Expense(SGA) was $962 Mil.
Total Current Liabilities was $609 Mil.
Long-Term Debt was $734 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)
=(525.5 / 4735.1) / (477.2 / 4075.3)
=0.1109797 / 0.11709567
=0.9478

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)
=(420.1 / 4075.3) / (377.8 / 4735.1)
=0.34071111 / 0.34694093
=0.982

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 - (1481.3 + 635.7) / 4942.8) / (1 - (1336.5 + 543.7) / 4085.3)
=0.57170025 / 0.53976452
=1.0592

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
=4735.1 / 4075.3
=1.1619

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))
=(99.3 / (99.3 + 543.7)) / (121.9 / (121.9 + 635.7))
=0.15443235 / 0.16090285
=0.9598

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)
=(1076.4 / 4735.1) / (962 / 4075.3)
=0.2273236 / 0.23605624
=0.963

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)
=((1619.2 + 684.9) / 4942.8) / ((733.7 + 609.1) / 4085.3)
=0.46615279 / 0.32869067
=1.4182

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
=(330.7 - -2.3 - 457.4) / 4942.8
=-0.0252

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 -2.62 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 0.89851.02220.91151.18010.9599
GMI 1.08580.91890.94141.01620.9859
AQI 1.12750.92951.03390.9581.0626
SGI 1.02941.07891.15770.96541.141
DEPI 0.96411.05471.02521.04580.9987
SGAI 1.04481.00280.92230.93670.9734
LVGI 1.9480.88471.08551.2721.1933
TATA -0.0576-0.0426-0.0151-0.0233-0.0188
M-score -3.04-2.62-2.52-2.54-2.52

Fortune Brands Home & Security Inc Quarterly Data

Dec13Mar14Jun14Sep14Dec14Mar15Jun15Sep15Dec15Mar16
DSRI 0.86350.94790.93470.93471.08750.92880.97060.90820.95990.9478
GMI 0.95220.9761.00471.00911.02461.02071.01141.01180.98590.982
AQI 1.03391.01210.95910.94560.9580.95961.04131.04841.06261.0592
SGI 1.22211.18731.14591.10461.04761.0641.10381.14741.1411.1619
DEPI 1.02521.12131.04190.95191.04580.95371.00981.02620.99870.9598
SGAI 0.91960.90990.88340.91610.91770.93810.97590.96850.97340.963
LVGI 1.08551.13171.16891.30141.2721.29561.40991.24541.19331.4182
TATA -0.01510.00590.0098-0.0159-0.0233-0.0448-0.036-0.0257-0.0188-0.0252
M-score -2.50-2.35-2.41-2.63-2.54-2.79-2.69-2.60-2.52-2.62
Get WordPress Plugins for easy affiliate links on Stock Tickers and Guru Names | Earn affiliate commissions by embedding GuruFocus Charts
GuruFocus Affiliate Program: Earn up to $400 per referral. ( Learn More)
FEEDBACK