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First Horizon (FRA:FT2) Beneish M-Score : -2.57 (As of Dec. 13, 2024)


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What is First Horizon Beneish M-Score?

Note: Financial institutions were excluded from the sample in Beneish paper when calculating Beneish M-Score. Thus, the prediction might not fit banks and insurance companies.

The zones of discrimination for M-Score is as such:

An M-Score of equal or less than -1.78 suggests that the company is unlikely to be a manipulator.
An M-Score of greater than -1.78 signals that the company is likely to be a manipulator.

Good Sign:

Beneish M-Score -2.57 no higher than -1.78, which implies that the company is unlikely to be a manipulator.

The historical rank and industry rank for First Horizon's Beneish M-Score or its related term are showing as below:

FRA:FT2' s Beneish M-Score Range Over the Past 10 Years
Min: -3.52   Med: -2.53   Max: 0.41
Current: -2.57

During the past 13 years, the highest Beneish M-Score of First Horizon was 0.41. The lowest was -3.52. And the median was -2.53.


First Horizon Beneish M-Score Calculation

The M-score was created by Professor Messod Beneish. Instead of measuring the bankruptcy risk (Altman Z-Score) or business trend (Piotroski 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 First Horizon 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+0.528 * 1+0.404 * 1.0002+0.892 * 0.9601+0.115 * 0.9733
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.1233+4.679 * -0.007926-0.327 * 1.0376
=-2.59

* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD.
* For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.

This Year (Sep24) TTM:Last Year (Sep23) TTM:
Total Receivables was €0 Mil.
Revenue was 722.602 + 735.768 + 734.16 + 712.509 = €2,905 Mil.
Gross Profit was 722.602 + 735.768 + 734.16 + 712.509 = €2,905 Mil.
Total Current Assets was €0 Mil.
Total Assets was €74,454 Mil.
Property, Plant and Equipment(Net PPE) was €515 Mil.
Depreciation, Depletion and Amortization(DDA) was €85 Mil.
Selling, General, & Admin. Expense(SGA) was €1,271 Mil.
Total Current Liabilities was €0 Mil.
Long-Term Debt & Capital Lease Obligation was €1,083 Mil.
Net Income was 196.418 + 184.871 + 176.64 + 168.728 = €727 Mil.
Non Operating Income was 0 + 0 + 0 + 0 = €0 Mil.
Cash Flow from Operations was 350.489 + -139.35 + 770.96 + 334.705 = €1,317 Mil.
Total Receivables was €0 Mil.
Revenue was 709.309 + 722.709 + 781.758 + 811.84 = €3,026 Mil.
Gross Profit was 709.309 + 722.709 + 781.758 + 811.84 = €3,026 Mil.
Total Current Assets was €0 Mil.
Total Assets was €77,333 Mil.
Property, Plant and Equipment(Net PPE) was €553 Mil.
Depreciation, Depletion and Amortization(DDA) was €89 Mil.
Selling, General, & Admin. Expense(SGA) was €1,178 Mil.
Total Current Liabilities was €0 Mil.
Long-Term Debt & Capital Lease Obligation was €1,084 Mil.




1. DSRI = Days Sales in Receivables Index

Measured as the ratio of Revenue in Total 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)
=(0 / 2905.039) / (0 / 3025.616)
=0 / 0
=1

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)
=(3025.616 / 3025.616) / (2905.039 / 2905.039)
=1 / 1
=1

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 Property, Plant and Equipment to Total Assets.

AQI=(1 - (CurrentAssets_t + PPE_t) / TotalAssets_t) / (1 - (CurrentAssets_t-1 + PPE_t-1) / TotalAssets_t-1)
=(1 - (0 + 515.372) / 74454.135) / (1 - (0 + 552.83) / 77333.421)
=0.993078 / 0.992851
=1.0002

4. SGI = Sales Growth Index

Ratio of Revenue 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
=2905.039 / 3025.616
=0.9601

5. DEPI = Depreciation Index

Measured as the ratio of the rate of Depreciation, Depletion and Amortization 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))
=(88.519 / (88.519 + 552.83)) / (85.163 / (85.163 + 515.372))
=0.13802 / 0.141812
=0.9733

Note: If the Depreciation, Depletion and Amortization data is not available, we assume that the depreciation rate is constant and set the Depreciation Index to 1.

6. SGAI = Sales, General and Administrative expenses Index

The ratio of Selling, General, & Admin. Expense(SGA) to Sales 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)
=(1270.772 / 2905.039) / (1178.271 / 3025.616)
=0.437437 / 0.389432
=1.1233

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 in leverage

LVGI=((LTD_t + CurrentLiabilities_t) / TotalAssets_t) / ((LTD_t-1 + CurrentLiabilities_t-1) / TotalAssets_t-1)
=((1083.002 + 0) / 74454.135) / ((1084.109 + 0) / 77333.421)
=0.014546 / 0.014019
=1.0376

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
=(726.657 - 0 - 1316.804) / 74454.135
=-0.007926

An M-Score of equal or less than -1.78 suggests that the company is unlikely to be a manipulator. An M-Score of greater than -1.78 signals that the company is likely to be a manipulator.

First Horizon has a M-score of -2.59 suggests that the company is unlikely to be a manipulator.


First Horizon Beneish M-Score Related Terms

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First Horizon Business Description

Address
165 Madison Avenue, Memphis, TN, USA, 38103
First Horizon Corp is the parent company of First Tennessee Bank, a prominent regional bank with about 200 branches around Tennessee. The regional bank is responsible for roughly 65% of its revenue, while capital markets make a 25% contribution. The remainder is split between the firm's non-strategic (wind-down) and corporate operations. First Horizon concentrates on offering a variety of banking products mainly in its home state, where it has the second- largest deposit franchise with a 13% deposit market share.