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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.
KBR Inc has a M-score of -2.93 suggests that the company is not a manipulator.
During the past 12 years, the highest Beneish M-Score of KBR Inc was -1.49. The lowest was -3.57. And the median was -2.50.
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 * 0.4948||+||0.528 * 1.6752||+||0.404 * 1.3336||+||0.892 * 0.9135||+||0.115 * 0.9649|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.2796||+||4.679 * -0.0797||-||0.327 * 0.936|
|This Year (Mar14) TTM:||Last Year (Mar13) TTM:|
|Accounts Receivable was $933 Mil.|
Revenue was 1633 + 1685 + 1811 + 1950 = $7,079 Mil.
Gross Profit was 39 + -50 + 232 + 140 = $361 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.
Net Income was -43 + -127 + 24 + 90 = $-56 Mil.
Non Operating Income was -7 + 1 + -3 + 4 = $-5 Mil.
Cash Flow from Operations was -17 + 216 + 178 + -4 = $373 Mil.
|Accounts Receivable was $2,064 Mil.
Revenue was 1829 + 1866 + 1992 + 2062 = $7,749 Mil.
Gross Profit was 156 + 98 + 225 + 183 = $662 Mil.
Total Current Assets was $3,495 Mil.
Total Assets was $5,547 Mil.
Property, Plant and Equipment(Net PPE) was $390 Mil.
Depreciation, Depletion and Amortization(DDA) was $64 Mil.
Selling, General & Admin. Expense(SGA) was $219 Mil.
Total Current Liabilities was $2,023 Mil.
Long-Term Debt was $79 Mil.
1. DSRI = Days Sales in Receivables Index
A large increase in DSR could be indicative of revenue inflation.
|DSRI||=||(Receivables_t / Revenue_t)||/||(Receivables_t-1 / Revenue_t-1)|
|=||(933 / 7079)||/||(2064 / 7749)|
2. GMI = Gross Margin Index
Measured as the ratio of gross margin in year t-1 to gross margin in year t.
Gross margin has deteriorated when this index is above 1. A firm with poorer prospects is more likely to manipulate earnings.
|=||(GrossProfit_t-1 / Revenue_t-1)||/||(GrossProfit_t / Revenue_t)|
|=||(-50 / 7749)||/||(39 / 7079)|
3. AQI = Asset Quality Index
AQI is the ratio of asset quality in year t to year t-1.
|AQI||=||(1 - (CurrentAssets_t + PPE_t) / TotalAssets_t)||/||(1 - (CurrentAssets_t-1 + PPE_t-1) / TotalAssets_t-1)|
|=||(1 - (2781 + 415) / 5323)||/||(1 - (3495 + 390) / 5547)|
4. SGI = Sales Growth Index
Ratio of sales in year t to sales in year t-1.
Sales growth is not itself a measure of manipulation. However, growth companies are likely to find themselves under pressure to manipulate in order to keep up appearances.
5. DEPI = Depreciation Index
Measured as the ratio of the rate of depreciation in year t-1 to the corresponding rate in year t.
DEPI greater than 1 indicates that assets are being depreciated at a slower rate. This suggests that the firm might be revising useful asset life assumptions upwards, or adopting a new method that is income friendly.
|DEPI||=||(Depreciation_t-1 / (Depreciaton_t-1 + PPE_t-1))||/||(Depreciation_t / (Depreciaton_t + PPE_t))|
|=||(64 / (64 + 390))||/||(71 / (71 + 415))|
6. SGAI = Sales, General and Administrative expenses Index
The ratio of SGA expenses in year t relative to year t-1.
SGA expenses index > 1 means that the company is becoming less efficient in generate sales.
|SGAI||=||(SGA_t / Sales_t)||/||(SGA_t-1 /Sales_t-1)|
|=||(256 / 7079)||/||(219 / 7749)|
7. LVGI = Leverage Index
The ratio of total debt to total assets in year t relative to yeat t-1.
An LVGI > 1 indicates an increase$sgai= in leverage
|LVGI||=||((LTD_t + CurrentLiabilities_t) / TotalAssets_t)||/||((LTD_t-1 + CurrentLiabilities_t-1) / TotalAssets_t-1)|
|=||((0 + 1888) / 5323)||/||((79 + 2023) / 5547)|
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|
|=||(-56 - -5||-||373)||/||5323|
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 -2.93 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
KBR Inc Annual Data
KBR Inc Quarterly Data