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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 -3.29 suggests that the company is not a manipulator.
During the past 13 years, the highest Beneish M-Score of H&R Block Inc was 1.53. The lowest was -3.99. And the median was -2.64.
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 * 0.7479||+||0.528 * 1.0509||+||0.404 * 0.9869||+||0.892 * 0.9834||+||0.115 * 1.2099|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.1142||+||4.679 * -0.1277||-||0.327 * 0.9647|
* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.
|This Year (Jan14) TTM:||Last Year (Jan13) TTM:|
|Accounts Receivable was $647 Mil.|
Revenue was 199.77 + 134.34 + 127.195 + 2200.212 = $2,662 Mil.
Gross Profit was -163.767 + -86.524 + -82.858 + 1378.477 = $1,045 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 $92 Mil.
Selling, General & Admin. Expense(SGA) was $617 Mil.
Total Current Liabilities was $2,055 Mil.
Long-Term Debt was $506 Mil.
Net Income was -214.711 + -104.943 + -115.187 + 664.34 = $229 Mil.
Non Operating Income was -9.61 + 1.254 + -4.939 + 3.026 = $-10 Mil.
Cash Flow from Operations was -627.949 + -173.631 + -318.742 + 1809.034 = $689 Mil.
|Accounts Receivable was $880 Mil.
Revenue was 471.979 + 137.263 + 96.489 + 2000.674 = $2,706 Mil.
Gross Profit was 94.361 + -74.748 + -96.935 + 1194.416 = $1,117 Mil.
Total Current Assets was $1,737 Mil.
Total Assets was $3,932 Mil.
Property, Plant and Equipment(Net PPE) was $273 Mil.
Depreciation, Depletion and Amortization(DDA) was $104 Mil.
Selling, General & Admin. Expense(SGA) was $563 Mil.
Total Current Liabilities was $2,063 Mil.
Long-Term Debt was $906 Mil.
1. DSRI = Days Sales in Receivables Index
A large increase in DSR could be indicative of revenue inflation.
|DSRI||=||(Receivables_t / Revenue_t)||/||(Receivables_t-1 / Revenue_t-1)|
|=||(646.912 / 2661.517)||/||(879.533 / 2706.405)|
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.
|=||(GrossProfit_t-1 / Revenue_t-1)||/||(GrossProfit_t / Revenue_t)|
|=||(-86.524 / 2706.405)||/||(-163.767 / 2661.517)|
3. AQI = Asset Quality Index
AQI is the ratio of asset quality in year t to year t-1.
|AQI||=||(1 - (CurrentAssets_t + PPE_t) / TotalAssets_t)||/||(1 - (CurrentAssets_t-1 + PPE_t-1) / TotalAssets_t-1)|
|=||(1 - (1504.711 + 314.565) / 3515.287)||/||(1 - (1736.549 + 273.45) / 3932.496)|
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.
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))|
|=||(103.576 / (103.576 + 273.45))||/||(92.407 / (92.407 + 314.565))|
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)|
|=||(616.904 / 2661.517)||/||(563.033 / 2706.405)|
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)|
|=||((505.959 + 2054.52) / 3515.287)||/||((906.012 + 2063.194) / 3932.496)|
8. TATA = Total Accruals to Total Assets
Total accruals calculated as the change in working capital accounts other than cash less depreciation.
|=||(NetIncome_t - NonOperatingIncome_t||-||CashFlowsfromOperations_t)||/||TotalAssets_t|
|=||(229.499 - -10.269||-||688.712)||/||3515.287|
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 -3.29 suggests that the company will not be a manipulator.
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
H&R Block Inc Annual Data
H&R Block Inc Quarterly Data