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H&R Block Inc (NYSE:HRB)
Beneish M-Score
-2.73 (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.

H&R Block Inc has a M-score of -2.76 suggests that the company is not a manipulator.

HRB' s Beneish M-Score Range Over the Past 10 Years
Min: -3.97   Max: 1.53
Current: -2.73

-3.97
1.53

During the past 13 years, the highest Beneish M-Score of H&R Block Inc was 1.53. The lowest was -3.97. And the median was -2.66.


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 H&R Block 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 * 0.9238+0.528 * 1.0465+0.404 * 1.6925+0.892 * 0.9868+0.115 * 0.8124
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.1073+4.679 * -0.0512-0.327 * 1.6847
=-2.76

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

This Year (Apr16) TTM:Last Year (Apr15) TTM:
Accounts Receivable was $153 Mil.
Revenue was 2297.477 + 474.543 + 128.415 + 137.718 = $3,038 Mil.
Gross Profit was 1444.347 + 82.03 + -97.986 + -75.79 = $1,353 Mil.
Total Current Assets was $1,222 Mil.
Total Assets was $2,858 Mil.
Property, Plant and Equipment(Net PPE) was $294 Mil.
Depreciation, Depletion and Amortization(DDA) was $58 Mil.
Selling, General & Admin. Expense(SGA) was $662 Mil.
Total Current Liabilities was $1,040 Mil.
Long-Term Debt was $1,502 Mil.
Net Income was 700.662 + -81.729 + -145.007 + -99.659 = $374 Mil.
Non Operating Income was 2.847 + -3.121 + 1.527 + -12.93 = $-12 Mil.
Cash Flow from Operations was 1959.343 + -824.236 + -224.467 + -378.246 = $532 Mil.
Accounts Receivable was $168 Mil.
Revenue was 2301.37 + 509.074 + 134.628 + 133.586 = $3,079 Mil.
Gross Profit was 1484.981 + 114.396 + -87.069 + -77.935 = $1,434 Mil.
Total Current Assets was $2,951 Mil.
Total Assets was $4,515 Mil.
Property, Plant and Equipment(Net PPE) was $311 Mil.
Depreciation, Depletion and Amortization(DDA) was $48 Mil.
Selling, General & Admin. Expense(SGA) was $606 Mil.
Total Current Liabilities was $1,878 Mil.
Long-Term Debt was $505 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)
=(153.116 / 3038.153) / (167.964 / 3078.658)
=0.05039773 / 0.05455754
=0.9238

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)
=(1434.373 / 3078.658) / (1352.601 / 3038.153)
=0.46590852 / 0.44520503
=1.0465

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 - (1222.298 + 293.565) / 2857.775) / (1 - (2951.301 + 311.387) / 4515.42)
=0.46956531 / 0.27743421
=1.6925

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
=3038.153 / 3078.658
=0.9868

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))
=(47.943 / (47.943 + 311.387)) / (57.691 / (57.691 + 293.565))
=0.13342332 / 0.16424203
=0.8124

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)
=(661.718 / 3038.153) / (605.559 / 3078.658)
=0.21780272 / 0.19669577
=1.1073

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)
=((1501.925 + 1039.605) / 2857.775) / ((505.298 + 1878.289) / 4515.42)
=0.88933873 / 0.52787714
=1.6847

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
=(374.267 - -11.677 - 532.394) / 2857.775
=-0.0512

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.

H&R Block Inc has a M-score of -2.76 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 local exchange's currency.

H&R Block Inc Annual Data

Apr07Apr08Apr09Apr10Apr11Apr12Apr13Apr14Apr15Apr16
DSRI 0.88430.54380.96060.67140.88560.89711.06250.89020.86110.9238
GMI 1.06241.0261.00671.00341.00760.81180.99110.96960.98181.0566
AQI 0.83031.18760.960.94761.08720.87630.97710.68181.02161.6925
SGI 1.12491.01630.99930.94880.97420.76671.00421.04071.0180.9868
DEPI 1.06221.14740.98420.93550.94740.97611.13260.9330.81060.9127
SGAI 0.85030.91010.82261.02641.12831.16190.97340.97140.97351.1073
LVGI 1.37650.96820.88770.98780.97021.00721.01860.93390.87891.6847
TATA 0.0349-0.0785-0.07180.00090.0031-0.00130.0067-0.0512-0.0118-0.0542
M-score -2.44-3.12-2.80-2.85-2.57-2.97-2.39-2.91-2.63-2.76

H&R Block Inc Quarterly Data

Apr14Jul14Oct14Jan15Apr15Jul15Oct15Jan16Apr16Jul16
DSRI 0.89020.9770.79160.95760.86110.82940.86681.17190.92381.0212
GMI 0.96960.96850.96120.78130.99120.99240.99751.09761.04651.0502
AQI 0.68180.70110.78840.61151.02161.02091.29751.60781.69251.7436
SGI 1.04071.0321.03311.2551.0181.01721.0150.91070.98680.9815
DEPI 00.1870.29670.40460.51180.52250.59010.68890.81240.8769
SGAI 0.97140.93380.91610.77080.97350.98171.05351.19061.10731.1194
LVGI 0.93390.89870.8160.93320.87890.82931.76591.64621.68472.0806
TATA -0.0512-0.0474-0.03780.0118-0.0118-0.0103-0.04590.0042-0.0512-0.0409
M-score -3.02-2.88-2.93-2.52-2.65-2.66-2.99-2.36-2.76-2.73
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