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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.
During the past 13 years, the highest Beneish M-Score of H&R Block Inc was -0.92. The lowest was -3.23. And the median was -2.74.
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 * 0.8611||+||0.528 * 1.0206||+||0.404 * 1.0216||+||0.892 * 1.018||+||0.115 * 0.5118|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9735||+||4.679 * -0.0324||-||0.327 * 0.8789|
|This Year (Apr15) TTM:||Last Year (Apr14) TTM:|
|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.
Net Income was 738.841 + -36.948 + -111.998 + -116.232 = $474 Mil.
Non Operating Income was 3.014 + -6.666 + -2.282 + -0.681 = $-7 Mil.
Cash Flow from Operations was 1873.808 + -619.623 + -245.992 + -381.585 = $627 Mil.
|Accounts Receivable was $192 Mil.
Revenue was 2562.99 + 199.77 + 134.34 + 127.195 = $3,024 Mil.
Gross Profit was 1743.591 + -149.895 + -72.723 + -82.858 = $1,438 Mil.
Total Current Assets was $3,114 Mil.
Total Assets was $4,694 Mil.
Property, Plant and Equipment(Net PPE) was $305 Mil.
Depreciation, Depletion and Amortization(DDA) was $22 Mil.
Selling, General & Admin. Expense(SGA) was $611 Mil.
Total Current Liabilities was $2,313 Mil.
Long-Term Debt was $506 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)|
|=||(167.964 / 3078.658)||/||(191.618 / 3024.295)|
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)|
|=||(114.396 / 3024.295)||/||(1484.981 / 3078.658)|
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 - (2951.301 + 311.387) / 4515.42)||/||(1 - (3114.006 + 304.911) / 4693.529)|
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))|
|=||(22.345 / (22.345 + 304.911))||/||(47.943 / (47.943 + 311.387))|
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)|
|=||(605.559 / 3078.658)||/||(611.083 / 3024.295)|
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)|
|=||((505.298 + 1878.289) / 4515.42)||/||((505.837 + 2313.116) / 4693.529)|
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|
|=||(473.663 - -6.615||-||626.608)||/||4515.42|
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 -2.74 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