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H&R Block Inc (NYSE:HRB)
Beneish M-Score
-3.02 (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 -3.02 suggests that the company is not a manipulator.

HRB' s 10-Year Beneish M-Score Range
Min: -3.97   Max: 1.53
Current: -3.02

-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 * 0.7916+0.528 * 0.9714+0.404 * 0.7884+0.892 * 1.0331+0.115 * 0.8254
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9556+4.679 * -0.0686-0.327 * 0.816
=-3.02

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

This Year (Oct14) TTM:Last Year (Oct13) TTM:
Accounts Receivable was $108 Mil.
Revenue was 134.628 + 133.586 + 2562.99 + 199.77 = $3,031 Mil.
Gross Profit was -87.069 + -77.935 + 1729.788 + -163.767 = $1,401 Mil.
Total Current Assets was $1,457 Mil.
Total Assets was $3,091 Mil.
Property, Plant and Equipment(Net PPE) was $318 Mil.
Depreciation, Depletion and Amortization(DDA) was $135 Mil.
Selling, General & Admin. Expense(SGA) was $596 Mil.
Total Current Liabilities was $1,076 Mil.
Long-Term Debt was $506 Mil.
Net Income was -111.998 + -116.232 + 909.998 + -214.711 = $467 Mil.
Non Operating Income was -2.282 + -0.681 + 17.2 + -9.61 = $5 Mil.
Cash Flow from Operations was -245.992 + -381.585 + 1929.903 + -627.949 = $674 Mil.
Accounts Receivable was $132 Mil.
Revenue was 134.34 + 127.195 + 2200.212 + 471.979 = $2,934 Mil.
Gross Profit was -72.723 + -82.858 + 1378.477 + 94.361 = $1,317 Mil.
Total Current Assets was $1,196 Mil.
Total Assets was $3,275 Mil.
Property, Plant and Equipment(Net PPE) was $311 Mil.
Depreciation, Depletion and Amortization(DDA) was $101 Mil.
Selling, General & Admin. Expense(SGA) was $603 Mil.
Total Current Liabilities was $1,547 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)
=(107.705 / 3030.974) / (131.701 / 2933.726)
=0.03553478 / 0.04489206
=0.7916

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)
=(-77.935 / 2933.726) / (-87.069 / 3030.974)
=0.44900478 / 0.46223326
=0.9714

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 - (1457.381 + 318.225) / 3091.29) / (1 - (1195.654 + 311.157) / 3274.513)
=0.42561002 / 0.53983661
=0.7884

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
=3030.974 / 2933.726
=1.0331

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))
=(101.234 / (101.234 + 311.157)) / (134.705 / (134.705 + 318.225))
=0.24548062 / 0.29740799
=0.8254

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)
=(595.772 / 3030.974) / (603.448 / 2933.726)
=0.19656124 / 0.20569337
=0.9556

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)
=((505.588 + 1075.677) / 3091.29) / ((506.078 + 1546.685) / 3274.513)
=0.5115227 / 0.62689108
=0.816

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
=(467.057 - 4.627 - 674.377) / 3091.29
=-0.0686

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 -3.02 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

Jul12Oct12Jan13Apr13Jul13Oct13Jan14Apr14Jul14Oct14
DSRI 0.36010.99160.92181.06251.02591.04480.74790.89020.9770.7916
GMI 0.92330.91630.94660.920.93270.9461.03720.96010.9590.9714
AQI 0.98860.96231.14480.97080.87481.09710.98690.68180.70110.7884
SGI 0.98090.98050.92111.00421.01631.01240.98341.04071.0321.0331
DEPI 0.97521.16351.15791.17271.18631.12211.12840.8850.86820.8254
SGAI 1.14081.05911.04120.94580.9891.01411.06720.98540.95960.9556
LVGI 1.09061.03771.00311.01860.94320.86080.96470.93390.89870.816
TATA -0.0164-0.0043-0.0204-0.0151-0.0326-0.0431-0.1277-0.0721-0.0722-0.0686
M-score -3.26-2.59-2.68-2.52-2.64-2.56-3.30-3.02-2.93-3.02
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