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H&R Block Inc (NYSE:HRB)
Beneish M-Score
-3.29 (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 -3.29 suggests that the company is not a manipulator.

HRB' s 10-Year Beneish M-Score Range
Min: -3.99   Max: 1.53
Current: -3.29

-3.99
1.53

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.


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 * 0.7479+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
=-3.29

* 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

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)
=(646.912 / 2661.517) / (879.533 / 2706.405)
=0.24306138 / 0.32498203
=0.7479

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)
=(-86.524 / 2706.405) / (-163.767 / 2661.517)
=0.41275936 / 0.39275646
=1.0509

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 - (1504.711 + 314.565) / 3515.287) / (1 - (1736.549 + 273.45) / 3932.496)
=0.48246729 / 0.4888745
=0.9869

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
=2661.517 / 2706.405
=0.9834

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))
=0.27471845 / 0.22705985
=1.2099

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)
=0.23178661 / 0.20803723
=1.1142

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)
=0.72838406 / 0.75504362
=0.9647

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
=(229.499 - -10.269 - 688.712) / 3515.287
=-0.1277

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.


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

Apr04Apr05Apr06Apr07Apr08Apr09Apr10Apr11Apr12Apr13
DSRI 0.98581.34540.83450.88430.54380.96061.06461.25030.40081.0625
GMI 1.83831.17650.97431.06241.0261.00671.00340.91510.96290.92
AQI 1.02290.97041.23610.83031.18760.960.94761.08720.8820.9708
SGI 1.07250.77081.15431.12491.01630.99930.94880.76010.98261.0042
DEPI 0.76241.50891.0361.06221.14740.98420.93550.94740.94271.1727
SGAI 0.41861.06281.11450.85030.91010.82261.02641.10241.18930.9734
LVGI 0.98331.01650.96951.37650.96820.88770.98780.97021.00721.0186
TATA -0.03130.0147-0.02110.017-0.1054-0.1006-0.0225-0.0226-0.0228-0.0151
M-score -2.04-2.17-2.52-2.52-3.25-2.93-2.60-2.59-3.26-2.53

H&R Block Inc Quarterly Data

Oct11Jan12Apr12Jul12Oct12Jan13Apr13Jul13Oct13Jan14
DSRI 0.38160.87730.42450.36010.99160.92181.06251.02591.04480.7479
GMI 0.97840.98790.89840.92330.91630.94660.920.93270.9561.0509
AQI 0.98141.12250.8820.98270.96231.14480.97080.881.09710.9869
SGI 0.8060.86110.92760.98090.98050.92111.00421.01631.01240.9834
DEPI 0.87060.89060.94271.00731.16351.15791.17271.1881.2031.2099
SGAI 1.1891.16231.1871.14081.05911.04120.97341.02411.05781.1142
LVGI 1.01360.96271.00721.09061.03771.00311.01860.94320.86080.9647
TATA -0.0401-0.0635-0.0228-0.0164-0.0043-0.0204-0.0151-0.0326-0.0431-0.1277
M-score -3.48-3.00-3.32-3.26-2.59-2.68-2.53-2.64-2.55-3.29
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