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H&R Block Inc (NYSE:HRB)
Beneish M-Score
-2.63 (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 -2.63 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: -2.63

-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 * 1.1231+0.528 * 1.0425+0.404 * 0.9441+0.892 * 0.9844+0.115 * 0.9227
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0165+4.679 * -0.0311-0.327 * 1.2771
=-2.63

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

This Year (Oct16) TTM:Last Year (Oct15) TTM:
Accounts Receivable was $105 Mil.
Revenue was 131.332 + 125.185 + 2297.477 + 474.543 = $3,029 Mil.
Gross Profit was -94.37 + -85.901 + 1444.347 + 82.03 = $1,346 Mil.
Total Current Assets was $703 Mil.
Total Assets was $2,082 Mil.
Property, Plant and Equipment(Net PPE) was $293 Mil.
Depreciation, Depletion and Amortization(DDA) was $60 Mil.
Selling, General & Admin. Expense(SGA) was $638 Mil.
Total Current Liabilities was $435 Mil.
Long-Term Debt was $1,967 Mil.
Net Income was -146.22 + -123.673 + 700.662 + -81.729 = $349 Mil.
Non Operating Income was 2.121 + 2.61 + 2.847 + -3.121 = $4 Mil.
Cash Flow from Operations was -250.122 + -475.675 + 1959.343 + -824.236 = $409 Mil.
Accounts Receivable was $95 Mil.
Revenue was 128.415 + 137.718 + 2301.37 + 509.074 = $3,077 Mil.
Gross Profit was -97.986 + -75.79 + 1484.981 + 114.396 = $1,426 Mil.
Total Current Assets was $727 Mil.
Total Assets was $2,290 Mil.
Property, Plant and Equipment(Net PPE) was $299 Mil.
Depreciation, Depletion and Amortization(DDA) was $56 Mil.
Selling, General & Admin. Expense(SGA) was $637 Mil.
Total Current Liabilities was $567 Mil.
Long-Term Debt was $1,502 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)
=(104.764 / 3028.537) / (94.76 / 3076.577)
=0.03459228 / 0.03080046
=1.1231

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)
=(1425.601 / 3076.577) / (1346.106 / 3028.537)
=0.46337244 / 0.44447402
=1.0425

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 - (703.474 + 293.06) / 2082.178) / (1 - (726.708 + 298.602) / 2289.897)
=0.52139827 / 0.55224624
=0.9441

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
=3028.537 / 3076.577
=0.9844

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))
=(55.843 / (55.843 + 298.602)) / (60.344 / (60.344 + 293.06))
=0.15755054 / 0.17075076
=0.9227

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)
=(637.501 / 3028.537) / (637.119 / 3076.577)
=0.21049801 / 0.20708697
=1.0165

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)
=((1967.206 + 434.857) / 2082.178) / ((1501.938 + 566.548) / 2289.897)
=1.15363 / 0.90330962
=1.2771

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
=(349.04 - 4.457 - 409.31) / 2082.178
=-0.0311

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 -2.63 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 0.88430.54380.96060.67141.1350.71.06250.89020.86110.9238
GMI 1.06241.0261.00671.00340.91510.96290.87030.98591.02061.0566
AQI 0.83031.18760.960.94761.08720.8820.97080.68181.02161.6925
SGI 1.12491.01630.99930.94880.76010.98261.00421.04071.0180.9868
DEPI 1.06221.14740.98420.93550.94740.94271.17270.9330.81060.9127
SGAI 0.85030.91010.82261.02641.10241.15110.97710.99980.97351.1073
LVGI 1.37650.96820.88770.98780.97021.00721.01860.93390.87891.6847
TATA 0.0349-0.0785-0.07180.00090.0031-0.00130.0067-0.0678-0.0324-0.0542
M-score -2.44-3.12-2.80-2.85-2.58-2.88-2.45-2.98-2.70-2.76

H&R Block Inc Quarterly Data

Jul14Oct14Jan15Apr15Jul15Oct15Jan16Apr16Jul16Oct16
DSRI 0.9770.79160.91470.86110.82940.86681.17190.92381.02121.1231
GMI 0.98430.99670.84361.01091.03161.02711.11571.05661.05021.0425
AQI 0.70110.78840.61151.02161.01951.29751.60781.69251.7460.9441
SGI 1.0321.03311.2551.0181.01721.0150.91070.98680.98150.9844
DEPI 0.1870.29670.40460.51180.52250.59010.68890.81240.87690.9227
SGAI 0.97380.96980.83470.97350.97481.03821.16071.10731.11941.0165
LVGI 0.89870.8160.93320.87890.82851.76591.64621.68472.08271.2771
TATA -0.0675-0.0662-0.0172-0.0303-0.0356-0.0819-0.0109-0.0542-0.0409-0.0311
M-score -2.97-3.05-2.67-2.73-2.76-3.14-2.42-2.77-2.73-2.63
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