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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 -3.01 suggests that the company is not a manipulator.
During the past 13 years, the highest Beneish M-Score of H&R Block Inc was -0.99. The lowest was -3.38. And the median was -2.70.
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 * 0.8902||+||0.528 * 0.9696||+||0.404 * 0.6818||+||0.892 * 1.0407||+||0.115 * 0.933|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9998||+||4.679 * -0.0721||-||0.327 * 0.9339|
|This Year (Apr14) TTM:||Last Year (Apr13) TTM:|
|Accounts Receivable was $192 Mil.|
Revenue was 2562.99 + 199.77 + 134.34 + 127.195 = $3,024 Mil.
Gross Profit was 1729.788 + -163.767 + -86.524 + -82.858 = $1,397 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 $116 Mil.
Selling, General & Admin. Expense(SGA) was $611 Mil.
Total Current Liabilities was $2,313 Mil.
Long-Term Debt was $506 Mil.
Net Income was 909.998 + -214.711 + -104.943 + -115.187 = $475 Mil.
Non Operating Income was 17.2 + -9.61 + 1.254 + -4.939 = $4 Mil.
Cash Flow from Operations was 1929.903 + -627.949 + -173.631 + -318.742 = $810 Mil.
|Accounts Receivable was $207 Mil.
Revenue was 2200.212 + 471.979 + 137.263 + 96.489 = $2,906 Mil.
Gross Profit was 1378.477 + 94.361 + -74.748 + -96.935 = $1,301 Mil.
Total Current Assets was $2,462 Mil.
Total Assets was $4,538 Mil.
Property, Plant and Equipment(Net PPE) was $268 Mil.
Depreciation, Depletion and Amortization(DDA) was $92 Mil.
Selling, General & Admin. Expense(SGA) was $587 Mil.
Total Current Liabilities was $2,012 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)|
|=||(191.618 / 3024.295)||/||(206.835 / 2905.943)|
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)|
|=||(-163.767 / 2905.943)||/||(1729.788 / 3024.295)|
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 - (3114.006 + 304.911) / 4693.529)||/||(1 - (2462.343 + 267.88) / 4537.779)|
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))|
|=||(92.407 / (92.407 + 267.88))||/||(115.604 / (115.604 + 304.911))|
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)|
|=||(611.083 / 3024.295)||/||(587.291 / 2905.943)|
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)|
|=||((505.837 + 2313.116) / 4693.529)||/||((905.958 + 2012.205) / 4537.779)|
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|
|=||(475.157 - 3.905||-||809.581)||/||4693.529|
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 -3.01 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