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KBR Inc (NYSE:KBR)
Beneish M-Score
-8.94 (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.

KBR Inc has a M-score of -8.94 suggests that the company is not a manipulator.

KBR' s 10-Year Beneish M-Score Range
Min: -8.94   Max: -1.06
Current: -8.94

-8.94
-1.06

During the past 13 years, the highest Beneish M-Score of KBR Inc was -1.06. The lowest was -8.94. And the median was -2.50.


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 KBR 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 * 1.0035+0.528 * -7.7561+0.404 * 0.9152+0.892 * 0.879+0.115 * 0.663
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9688+4.679 * -0.3307-0.327 * 1.3643
=-8.94

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

This Year (Mar15) TTM:Last Year (Mar14) TTM:
Accounts Receivable was $823 Mil.
Revenue was 1436 + 1417 + 1657 + 1659 = $6,169 Mil.
Gross Profit was 70 + -162 + 30 + 28 = $-34 Mil.
Total Current Assets was $2,233 Mil.
Total Assets was $3,883 Mil.
Property, Plant and Equipment(Net PPE) was $230 Mil.
Depreciation, Depletion and Amortization(DDA) was $65 Mil.
Selling, General & Admin. Expense(SGA) was $218 Mil.
Total Current Liabilities was $1,819 Mil.
Long-Term Debt was $60 Mil.
Net Income was 44 + -1241 + 30 + -8 = $-1,175 Mil.
Non Operating Income was 6 + -2 + 31 + -5 = $30 Mil.
Cash Flow from Operations was -108 + -8 + 158 + 37 = $79 Mil.
Accounts Receivable was $933 Mil.
Revenue was 1633 + 1680 + 1755 + 1950 = $7,018 Mil.
Gross Profit was 39 + 7 + 114 + 140 = $300 Mil.
Total Current Assets was $2,781 Mil.
Total Assets was $5,323 Mil.
Property, Plant and Equipment(Net PPE) was $415 Mil.
Depreciation, Depletion and Amortization(DDA) was $71 Mil.
Selling, General & Admin. Expense(SGA) was $256 Mil.
Total Current Liabilities was $1,888 Mil.
Long-Term Debt was $0 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)
=(823 / 6169) / (933 / 7018)
=0.13340898 / 0.13294386
=1.0035

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)
=(-162 / 7018) / (70 / 6169)
=0.04274722 / -0.00551143
=-7.7561

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 - (2233 + 230) / 3883) / (1 - (2781 + 415) / 5323)
=0.36569663 / 0.3995867
=0.9152

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
=6169 / 7018
=0.879

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))
=(71 / (71 + 415)) / (65 / (65 + 230))
=0.14609053 / 0.22033898
=0.663

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)
=(218 / 6169) / (256 / 7018)
=0.03533798 / 0.03647763
=0.9688

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)
=((60 + 1819) / 3883) / ((0 + 1888) / 5323)
=0.4839042 / 0.35468721
=1.3643

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
=(-1175 - 30 - 79) / 3883
=-0.3307

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.

KBR Inc has a M-score of -8.94 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.

KBR Inc Annual Data

Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14
DSRI 0.85070.49931.06870.90641.40310.89941.07971.04640.9089
GMI 1.3290.60750.90491.05080.76460.94921.29251.1533-5.6613
AQI 0.79810.9421.4281.05881.23350.9811.02821.1510.8691
SGI 0.94390.90781.32431.04520.83430.9170.8390.92840.8825
DEPI 1.28440.55510.94250.92731.20890.95281.09231.01470.6238
SGAI 1.34622.30510.74510.9311.1711.10081.23641.20321.0921
LVGI 0.85080.91441.02590.83161.00740.96340.90730.96391.3616
TATA -0.14040.01330.03450.0618-0.0399-0.03050.001-0.0394-0.3451
M-score -3.21-3.44-1.81-2.13-2.48-2.83-2.38-2.57-8.03

KBR Inc Quarterly Data

Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14Dec14Mar15
DSRI 1.07971.36811.20980.91391.04640.78910.87461.00780.90891.0035
GMI 1.29251.28721.36821.88581.15331.57332.2373.1391-5.6613-7.7561
AQI 1.02820.88421.01891.09841.1511.33361.20011.20570.86910.9152
SGI 0.8390.84980.8760.88930.92840.92370.89860.91450.88250.879
DEPI 1.09231.08181.14791.04241.01470.96490.93080.91650.62380.663
SGAI 1.23641.14541.19891.2611.20321.26561.22411.11631.09210.9688
LVGI 0.90730.96410.89330.82050.96390.9361.05331.07291.36161.3643
TATA 0.001-0.00160.0061-0.0122-0.0394-0.0783-0.103-0.0899-0.3446-0.3307
M-score -2.38-2.18-2.15-2.19-2.57-2.70-2.50-1.81-8.03-8.94
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