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Fortune Brands Home & Security Inc (NYSE:FBHS)
Beneish M-Score
-2.60 (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 -2.60 suggests that the company is not a manipulator.

FBHS' s Beneish M-Score Range Over the Past 10 Years
Min: -2.79   Max: -2.38
Current: -2.6

-2.79
-2.38

During the past 7 years, the highest Beneish M-Score of Fortune Brands Home & Security Inc was -2.38. 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 * 0.9082+0.528 * 1.0118+0.404 * 1.0484+0.892 * 1.1474+0.115 * 1.0262
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9685+4.679 * -0.0257-0.327 * 1.2454
=-2.60

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

This Year (Sep15) TTM:Last Year (Sep14) TTM:
Accounts Receivable was $557 Mil.
Revenue was 1238.8 + 1165.1 + 950.8 + 1039.6 = $4,394 Mil.
Gross Profit was 434.5 + 410.4 + 316.9 + 341.8 = $1,504 Mil.
Total Current Assets was $1,623 Mil.
Total Assets was $5,082 Mil.
Property, Plant and Equipment(Net PPE) was $606 Mil.
Depreciation, Depletion and Amortization(DDA) was $107 Mil.
Selling, General & Admin. Expense(SGA) was $1,031 Mil.
Total Current Liabilities was $778 Mil.
Long-Term Debt was $1,338 Mil.
Net Income was 107.5 + 79.7 + 40 + 45.1 = $272 Mil.
Non Operating Income was -0.5 + -1.5 + -1.7 + -1.2 = $-5 Mil.
Cash Flow from Operations was 222.3 + 108.5 + -66.7 + 143.5 = $408 Mil.
Accounts Receivable was $535 Mil.
Revenue was 1057.7 + 1027.2 + 889.1 + 855.7 = $3,830 Mil.
Gross Profit was 368 + 361.8 + 295.3 + 300.8 = $1,326 Mil.
Total Current Assets was $1,363 Mil.
Total Assets was $4,081 Mil.
Property, Plant and Equipment(Net PPE) was $533 Mil.
Depreciation, Depletion and Amortization(DDA) was $97 Mil.
Selling, General & Admin. Expense(SGA) was $928 Mil.
Total Current Liabilities was $710 Mil.
Long-Term Debt was $654 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)
=(557 / 4394.3) / (534.5 / 3829.7)
=0.12675511 / 0.13956707
=0.9082

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)
=(410.4 / 3829.7) / (434.5 / 4394.3)
=0.34621511 / 0.34217054
=1.0118

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 - (1623.4 + 606.3) / 5082.2) / (1 - (1362.9 + 533.3) / 4081.2)
=0.56127268 / 0.53538175
=1.0484

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
=4394.3 / 3829.7
=1.1474

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))
=(97.4 / (97.4 + 533.3)) / (107.4 / (107.4 + 606.3))
=0.15443158 / 0.1504834
=1.0262

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)
=(1031.2 / 4394.3) / (927.9 / 3829.7)
=0.23466764 / 0.24229052
=0.9685

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)
=((1337.6 + 777.7) / 5082.2) / ((653.8 + 710.2) / 4081.2)
=0.41621739 / 0.33421543
=1.2454

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
=(272.3 - -4.9 - 407.6) / 5082.2
=-0.0257

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 -2.60 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

Sep13Dec13Mar14Jun14Sep14Dec14Mar15Jun15Sep15Dec15
DSRI 1.14070.98921.08191.06271.05771.08750.92880.97060.90820.9599
GMI 0.92010.93360.95540.98190.98621.02461.02071.01141.01180.9859
AQI 0.99741.03391.01210.95910.94560.9580.95961.04131.04841.0626
SGI 1.11481.06681.04021.00780.97611.04761.0641.10381.14741.141
DEPI 1.2721.02521.12131.04190.95191.04580.95371.00981.02620.9987
SGAI 0.96210.94150.93040.90230.93120.91770.93810.97590.96850.9734
LVGI 1.03721.08551.13171.16891.30141.2721.29561.40991.24541.1933
TATA -0.0342-0.01510.00590.0098-0.0159-0.0233-0.0448-0.036-0.0257-0.0188
M-score -2.43-2.54-2.38-2.43-2.64-2.54-2.79-2.69-2.60-2.52
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