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KBR Inc (NYSE:KBR)
Beneish M-Score
-8.03 (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 -8.03 suggests that the company is not a manipulator.

KBR' s 10-Year Beneish M-Score Range
Min: -8.03   Max: -1.74
Current: -8.03

-8.03
-1.74

During the past 13 years, the highest Beneish M-Score of KBR Inc was -1.74. The lowest was -8.03. And the median was -2.52.


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 * 0.9089+0.528 * -5.6613+0.404 * 0.8691+0.892 * 0.8825+0.115 * 0.6238
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0921+4.679 * -0.3451-0.327 * 1.3616
=-8.03

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

This Year (Dec14) TTM:Last Year (Dec13) TTM:
Accounts Receivable was $847 Mil.
Revenue was 1417 + 1657 + 1659 + 1633 = $6,366 Mil.
Gross Profit was -162 + 30 + 28 + 39 = $-65 Mil.
Total Current Assets was $2,544 Mil.
Total Assets was $4,199 Mil.
Property, Plant and Equipment(Net PPE) was $247 Mil.
Depreciation, Depletion and Amortization(DDA) was $72 Mil.
Selling, General & Admin. Expense(SGA) was $239 Mil.
Total Current Liabilities was $2,024 Mil.
Long-Term Debt was $63 Mil.
Net Income was -1241 + 30 + -8 + -43 = $-1,262 Mil.
Non Operating Income was -2 + 31 + -5 + -7 = $17 Mil.
Cash Flow from Operations was -8 + 158 + 37 + -17 = $170 Mil.
Accounts Receivable was $1,056 Mil.
Revenue was 1680 + 1755 + 1950 + 1829 = $7,214 Mil.
Gross Profit was 7 + 114 + 140 + 156 = $417 Mil.
Total Current Assets was $2,925 Mil.
Total Assets was $5,438 Mil.
Property, Plant and Equipment(Net PPE) was $415 Mil.
Depreciation, Depletion and Amortization(DDA) was $68 Mil.
Selling, General & Admin. Expense(SGA) was $248 Mil.
Total Current Liabilities was $1,907 Mil.
Long-Term Debt was $78 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)
=(847 / 6366) / (1056 / 7214)
=0.13305058 / 0.14638203
=0.9089

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)
=(30 / 7214) / (-162 / 6366)
=0.05780427 / -0.01021049
=-5.6613

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 - (2544 + 247) / 4199) / (1 - (2925 + 415) / 5438)
=0.33531793 / 0.3858036
=0.8691

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
=6366 / 7214
=0.8825

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))
=(68 / (68 + 415)) / (72 / (72 + 247))
=0.14078675 / 0.22570533
=0.6238

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)
=(239 / 6366) / (248 / 7214)
=0.0375432 / 0.0343776
=1.0921

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)
=((63 + 2024) / 4199) / ((78 + 1907) / 5438)
=0.4970231 / 0.36502391
=1.3616

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
=(-1262 - 17 - 170) / 4199
=-0.3451

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 -8.03 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

Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14Dec14
DSRI 1.11031.07971.36811.20980.91391.04640.78910.87461.00780.9089
GMI 0.92531.29251.28721.36821.88581.15331.57332.2373.1391-5.6613
AQI 0.92161.02820.88421.01891.09841.1511.33361.20011.20570.8691
SGI 0.85740.8390.84980.8760.88930.92840.92370.89860.91450.8825
DEPI 1.08021.09231.08181.14791.04241.01470.96490.93080.91650.6238
SGAI 1.1451.23641.14541.19891.2611.20321.26561.22411.11631.0921
LVGI 1.00620.90730.96410.89330.82050.96390.9361.05331.07291.3616
TATA -0.02120.001-0.00160.0061-0.0122-0.0394-0.0787-0.1034-0.0902-0.3451
M-score -2.69-2.38-2.18-2.15-2.19-2.57-2.70-2.50-1.81-8.03
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