Switch to:
Arcos Dorados Holdings Inc (NYSE:ARCO)
Beneish M-Score
-1.54 (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.

Arcos Dorados Holdings Inc has a M-score of -1.54 signals that the company is a manipulator.

ARCO' s Beneish M-Score Range Over the Past 10 Years
Min: -5.42   Max: -1.06
Current: -1.54

-5.42
-1.06

During the past 7 years, the highest Beneish M-Score of Arcos Dorados Holdings Inc was -1.06. The lowest was -5.42. And the median was -2.87.


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 Arcos Dorados Holdings 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 * 1.9581+0.528 * 0.8887+0.404 * 0.9043+0.892 * 0.8364+0.115 * 3.6334
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.3632+4.679 * 0.018-0.327 * 1.07
=-1.54

* 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 $93 Mil.
Revenue was 658.514 + 764.986 + 753.695 + 759.001 = $2,936 Mil.
Gross Profit was 70.943 + 153.41 + 89.331 + 83.953 = $398 Mil.
Total Current Assets was $537 Mil.
Total Assets was $1,596 Mil.
Property, Plant and Equipment(Net PPE) was $847 Mil.
Depreciation, Depletion and Amortization(DDA) was $25 Mil.
Selling, General & Admin. Expense(SGA) was $308 Mil.
Total Current Liabilities was $592 Mil.
Long-Term Debt was $657 Mil.
Net Income was 16.064 + 5.551 + -35.924 + 6.973 = $-7 Mil.
Non Operating Income was 16.552 + -9.198 + -28.054 + 3.516 = $-17 Mil.
Cash Flow from Operations was -18.859 + 0 + 0 + 0 = $-19 Mil.
Accounts Receivable was $57 Mil.
Revenue was 775.058 + 913.629 + 904.02 + 917.922 = $3,511 Mil.
Gross Profit was 85.075 + 131.743 + 107.264 + 98.41 = $422 Mil.
Total Current Assets was $334 Mil.
Total Assets was $1,555 Mil.
Property, Plant and Equipment(Net PPE) was $993 Mil.
Depreciation, Depletion and Amortization(DDA) was $116 Mil.
Selling, General & Admin. Expense(SGA) was $270 Mil.
Total Current Liabilities was $426 Mil.
Long-Term Debt was $712 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)
=(92.867 / 2936.196) / (56.706 / 3510.629)
=0.03162834 / 0.01615266
=1.9581

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)
=(153.41 / 3510.629) / (70.943 / 2936.196)
=0.12034652 / 0.1354259
=0.8887

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 - (537.413 + 846.542) / 1595.866) / (1 - (333.565 + 993.163) / 1555.07)
=0.13278746 / 0.14683712
=0.9043

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
=2936.196 / 3510.629
=0.8364

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))
=(116.491 / (116.491 + 993.163)) / (25.187 / (25.187 + 846.542))
=0.10497957 / 0.02889315
=3.6334

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)
=(308.238 / 2936.196) / (270.36 / 3510.629)
=0.10497869 / 0.07701184
=1.3632

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)
=((657.411 + 591.557) / 1595.866) / ((711.813 + 425.578) / 1555.07)
=0.78262711 / 0.73140823
=1.07

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
=(-7.336 - -17.184 - -18.859) / 1595.866
=0.018

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.

Arcos Dorados Holdings Inc has a M-score of -1.54 signals that the company is likely to 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.

Arcos Dorados Holdings Inc Annual Data

Dec09Dec10Dec11Dec12Dec13Dec14Dec15
DSRI 0.8890.52160.98640.67522.4595
GMI 0.96481.10821.03831.28970.8902
AQI 0.78330.94190.93361.04261.0733
SGI 1.21191.03821.06210.90520.8361
DEPI 0.98860.90120.86120.89210.8078
SGAI 1.09240.92420.96780.78881.4284
LVGI 1.00421.00791.09451.10681.0498
TATA -0.0621-0.0309-0.0548-0.1269-0.0759
M-score -2.81-3.00-2.74-3.30-1.78

Arcos Dorados Holdings Inc Quarterly Data

Dec13Mar14Jun14Sep14Dec14Mar15Jun15Sep15Dec15Mar16
DSRI 0.98640.88970.38210.91750.67520.31390.88271.45012.45951.9581
GMI 1.03831.04681.09151.17151.28971.23271.15431.06910.89020.8887
AQI 0.93360.95830.96871.00451.04261.11751.06871.13851.07330.9043
SGI 1.06211.03090.99060.94660.90520.88390.85930.84620.83610.8364
DEPI 0.86120.92720.99550.97780.89210.80471.06471.47282.94513.6334
SGAI 0.96780.91090.8660.82050.78880.86860.91771.01581.42841.3631
LVGI 1.09451.09731.1331.08081.10681.07791.04181.05821.04981.07
TATA -0.0548-0.0536-0.1127-0.0888-0.1269-0.1556-0.0952-0.09640.02580.018
M-score -2.74-2.82-3.57-2.92-3.30-3.80-3.04-2.53-1.06-1.54
Get WordPress Plugins for easy affiliate links on Stock Tickers and Guru Names | Earn affiliate commissions by embedding GuruFocus Charts
GuruFocus Affiliate Program: Earn up to $400 per referral. ( Learn More)
FEEDBACK