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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.
During the past 13 years, the highest Beneish M-Score of Cheesecake Factory Inc was 4.21. The lowest was -78.44. And the median was -2.89.
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 Cheesecake Factory 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 * 0.9041||+||0.528 * 1.0189||+||0.404 * 0.9995||+||0.892 * 1.0641||+||0.115 * 1.0061|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0101||+||4.679 * -0.1078||-||0.327 * 1.0621|
|This Year (Jun15) TTM:||Last Year (Jun14) TTM:|
|Accounts Receivable was $9 Mil.|
Revenue was 529.107 + 517.973 + 499.673 + 499.114 = $2,046 Mil.
Gross Profit was 110.314 + 96.757 + 90.629 + 88.712 = $386 Mil.
Total Current Assets was $208 Mil.
Total Assets was $1,175 Mil.
Property, Plant and Equipment(Net PPE) was $851 Mil.
Depreciation, Depletion and Amortization(DDA) was $84 Mil.
Selling, General & Admin. Expense(SGA) was $142 Mil.
Total Current Liabilities was $298 Mil.
Long-Term Debt was $25 Mil.
Net Income was 34.724 + 28.423 + 24.486 + 24.223 = $112 Mil.
Non Operating Income was 0 + 0 + 0 + 0 = $0 Mil.
Cash Flow from Operations was 55.618 + 65.348 + 78.671 + 38.87 = $239 Mil.
|Accounts Receivable was $9 Mil.
Revenue was 496.406 + 481.431 + 475.075 + 469.699 = $1,923 Mil.
Gross Profit was 95.385 + 86.986 + 95.213 + 92.404 = $370 Mil.
Total Current Assets was $163 Mil.
Total Assets was $1,081 Mil.
Property, Plant and Equipment(Net PPE) was $811 Mil.
Depreciation, Depletion and Amortization(DDA) was $81 Mil.
Selling, General & Admin. Expense(SGA) was $132 Mil.
Total Current Liabilities was $255 Mil.
Long-Term Debt was $25 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)|
|=||(8.811 / 2045.867)||/||(9.158 / 1922.611)|
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)|
|=||(96.757 / 1922.611)||/||(110.314 / 2045.867)|
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 - (207.853 + 851.477) / 1174.79)||/||(1 - (163.415 + 810.855) / 1080.521)|
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))|
|=||(80.898 / (80.898 + 810.855))||/||(84.385 / (84.385 + 851.477))|
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)|
|=||(142.253 / 2045.867)||/||(132.343 / 1922.611)|
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)|
|=||((25 + 298.241) / 1174.79)||/||((25 + 254.913) / 1080.521)|
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|
|=||(111.856 - 0||-||238.507)||/||1174.79|
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.
Cheesecake Factory Inc has a M-score of -3.03 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
Cheesecake Factory Inc Annual Data
Cheesecake Factory Inc Quarterly Data