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KBR Inc (NYSE:KBR)
Beneish M-Score
-3.05 (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 -3.05 suggests that the company is not a manipulator.

KBR' s Beneish M-Score Range Over the Past 10 Years
Min: -8.94   Max: 2.62
Current: -3.05

-8.94
2.62

During the past 13 years, the highest Beneish M-Score of KBR Inc was 2.62. The lowest was -8.94. And the median was -2.51.


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 * 0.9386+0.528 * -0.0794+0.404 * 1.1871+0.892 * 0.7547+0.115 * 1.1851
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9117+4.679 * 0.0226-0.327 * 0.8358
=-3.05

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

This Year (Mar16) TTM:Last Year (Mar15) TTM:
Accounts Receivable was $583 Mil.
Revenue was 996 + 1080 + 1199 + 1381 = $4,656 Mil.
Gross Profit was 68 + 94 + 87 + 74 = $323 Mil.
Total Current Assets was $1,745 Mil.
Total Assets was $3,370 Mil.
Property, Plant and Equipment(Net PPE) was $162 Mil.
Depreciation, Depletion and Amortization(DDA) was $37 Mil.
Selling, General & Admin. Expense(SGA) was $150 Mil.
Total Current Liabilities was $1,313 Mil.
Long-Term Debt was $50 Mil.
Net Income was 42 + 42 + 55 + 62 = $201 Mil.
Non Operating Income was -5 + -2 + 3 + -5 = $-9 Mil.
Cash Flow from Operations was -21 + 132 + 54 + -31 = $134 Mil.
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.



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)
=(583 / 4656) / (823 / 6169)
=0.12521478 / 0.13340898
=0.9386

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)
=(-34 / 6169) / (323 / 4656)
=-0.00551143 / 0.06937285
=-0.0794

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 - (1745 + 162) / 3370) / (1 - (2233 + 230) / 3883)
=0.43412463 / 0.36569663
=1.1871

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
=4656 / 6169
=0.7547

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))
=(65 / (65 + 230)) / (37 / (37 + 162))
=0.22033898 / 0.18592965
=1.1851

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)
=(150 / 4656) / (218 / 6169)
=0.03221649 / 0.03533798
=0.9117

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)
=((50 + 1313) / 3370) / ((60 + 1819) / 3883)
=0.40445104 / 0.4839042
=0.8358

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
=(201 - -9 - 134) / 3370
=0.0226

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 -3.05 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

Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15
DSRI 0.85070.49931.06870.90641.40310.89941.05911.05660.91760.9262
GMI 1.3290.60750.90491.05080.76460.94921.02021.0587-7.813-0.1601
AQI 0.79810.9421.4281.05881.23350.9811.02821.1510.87521.2143
SGI 0.94390.90781.32431.04520.83430.9170.85530.91950.87410.8005
DEPI 1.28440.55510.94250.92731.20890.95281.09231.01470.62381.2038
SGAI 1.34622.30510.74510.9311.1711.10081.21291.21991.09810.8102
LVGI 0.85080.91441.02590.83161.00740.96340.90730.96391.37110.8567
TATA -0.1380.01310.03450.0618-0.0399-0.03050.001-0.0107-0.35530.0451
M-score -3.20-3.44-1.81-2.13-2.48-2.83-2.52-2.48-9.22-2.94

KBR Inc Quarterly Data

Dec13Mar14Jun14Sep14Dec14Mar15Jun15Sep15Dec15Mar16
DSRI 1.04640.78910.87461.00780.90891.00351.0090.88470.92620.9386
GMI 1.15331.57332.2373.1391-5.6613-7.756113.71971.2353-0.1601-0.0794
AQI 1.1511.33361.20011.20570.87520.91520.93221.02161.21431.1871
SGI 0.92840.92370.89860.91450.88250.8790.87570.81960.80050.7547
DEPI 1.01470.96490.93080.91650.62380.6630.7630.8111.20381.1851
SGAI 1.20321.26561.22411.11631.09210.96880.90270.89640.81020.9117
LVGI 0.96390.9361.05331.07291.37111.36431.21171.17960.85670.8358
TATA -0.0399-0.0789-0.1032-0.0906-0.3553-0.3312-0.3009-0.27120.04510.0226
M-score -2.57-2.70-2.50-1.81-8.08-8.942.62-3.95-2.94-3.05
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