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H&R Block Inc (NYSE:HRB)
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.

H&R Block Inc has a M-score of -2.60 suggests that the company is not a manipulator.

HRB' s 10-Year Beneish M-Score Range
Min: -3.97   Max: 1.53
Current: -2.6

-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 -2.68.


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 * 0.9147+0.528 * 0.8223+0.404 * 0.6115+0.892 * 1.255+0.115 * 0.7847
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.8347+4.679 * -0.0104-0.327 * 0.9332
=-2.60

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

This Year (Jan15) TTM:Last Year (Jan14) TTM:
Accounts Receivable was $777 Mil.
Revenue was 509.074 + 134.628 + 133.586 + 2562.99 = $3,340 Mil.
Gross Profit was 114.396 + -87.069 + -77.935 + 1688.312 = $1,638 Mil.
Total Current Assets was $2,778 Mil.
Total Assets was $4,379 Mil.
Property, Plant and Equipment(Net PPE) was $309 Mil.
Depreciation, Depletion and Amortization(DDA) was $149 Mil.
Selling, General & Admin. Expense(SGA) was $612 Mil.
Total Current Liabilities was $2,471 Mil.
Long-Term Debt was $505 Mil.
Net Income was -36.948 + -111.998 + -116.232 + 909.998 = $645 Mil.
Non Operating Income was -6.666 + -2.282 + -0.681 + 17.2 = $8 Mil.
Cash Flow from Operations was -619.623 + -245.992 + -381.585 + 1929.903 = $683 Mil.
Accounts Receivable was $677 Mil.
Revenue was 199.77 + 134.34 + 127.195 + 2200.212 = $2,662 Mil.
Gross Profit was -149.895 + -72.723 + -82.858 + 1378.477 = $1,073 Mil.
Total Current Assets was $1,505 Mil.
Total Assets was $3,515 Mil.
Property, Plant and Equipment(Net PPE) was $315 Mil.
Depreciation, Depletion and Amortization(DDA) was $108 Mil.
Selling, General & Admin. Expense(SGA) was $584 Mil.
Total Current Liabilities was $2,055 Mil.
Long-Term Debt was $506 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)
=(777.453 / 3340.278) / (677.221 / 2661.517)
=0.23275099 / 0.25444925
=0.9147

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)
=(-87.069 / 2661.517) / (114.396 / 3340.278)
=0.40315392 / 0.49028973
=0.8223

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 - (2778.319 + 308.805) / 4378.941) / (1 - (1504.711 + 314.565) / 3515.287)
=0.29500672 / 0.48246729
=0.6115

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
=3340.278 / 2661.517
=1.255

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))
=(107.778 / (107.778 + 314.565)) / (148.815 / (148.815 + 308.805))
=0.25519069 / 0.32519339
=0.7847

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)
=(612.132 / 3340.278) / (584.355 / 2661.517)
=0.1832578 / 0.21955712
=0.8347

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)
=((505.46 + 2471.104) / 4378.941) / ((505.959 + 2054.52) / 3515.287)
=0.67974517 / 0.72838406
=0.9332

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
=(644.82 - 7.571 - 682.703) / 4378.941
=-0.0104

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 -2.60 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.

H&R Block Inc Annual Data

Apr05Apr06Apr07Apr08Apr09Apr10Apr11Apr12Apr13Apr14
DSRI 1.22511.42660.88430.54380.96060.67141.1350.71.06250.8902
GMI 1.17650.97431.06241.0261.00671.00340.91510.96290.920.9696
AQI 0.97041.23610.83031.18760.960.94761.08720.8820.97080.6818
SGI 0.77081.15431.12491.01630.99930.94880.76010.98261.00421.0407
DEPI 1.50891.0361.06221.14740.98420.93550.94740.94271.17270.933
SGAI 1.06281.11450.85030.91010.82261.02641.10241.18930.94580.9998
LVGI 1.01650.96951.37650.96820.88770.98780.97021.00721.01860.9339
TATA 0.0147-0.02110.017-0.1054-0.1006-0.0225-0.0226-0.0228-0.0151-0.0721
M-score -2.29-1.97-2.52-3.25-2.93-2.96-2.70-2.99-2.52-3.01

H&R Block Inc Quarterly Data

Oct12Jan13Apr13Jul13Oct13Jan14Apr14Jul14Oct14Jan15
DSRI 0.99160.92181.06251.02591.04480.7830.89020.9770.79160.9147
GMI 0.91630.94660.920.93270.9461.02380.97930.97810.99090.8223
AQI 0.96231.14480.97080.87481.09710.98690.68180.70110.78840.6115
SGI 0.98050.92111.00421.01631.01240.98341.04071.0321.03311.255
DEPI 1.16351.15791.17271.18631.12211.07650.85360.83840.79850.7847
SGAI 1.05911.04120.94580.9891.01411.05540.99980.97380.96980.8347
LVGI 1.03771.00311.01860.94320.86080.96470.93390.89870.8160.9332
TATA -0.0043-0.0204-0.0151-0.0326-0.0431-0.1277-0.0721-0.0722-0.0686-0.0104
M-score -2.59-2.68-2.52-2.64-2.56-3.27-3.02-2.92-3.01-2.60
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