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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.
Cheesecake Factory Inc has a M-score of -2.95 suggests that the company is not a manipulator.
During the past 13 years, the highest Beneish M-Score of Cheesecake Factory Inc was 0.77. The lowest was -78.18. And the median was -2.75.
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 * 1.1545||+||0.528 * 0.9586||+||0.404 * 1.0673||+||0.892 * 1.0327||+||0.115 * 0.9975|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0881||+||4.679 * -0.1166||-||0.327 * 1.2637|
|This Year (Mar14) TTM:||Last Year (Mar13) TTM:|
|Accounts Receivable was $41 Mil.|
Revenue was 481.431 + 475.075 + 469.699 + 470.118 = $1,896 Mil.
Gross Profit was 86.986 + -243.525 + 206.359 + 92.204 = $142 Mil.
Total Current Assets was $167 Mil.
Total Assets was $1,074 Mil.
Property, Plant and Equipment(Net PPE) was $803 Mil.
Depreciation, Depletion and Amortization(DDA) was $80 Mil.
Selling, General & Admin. Expense(SGA) was $117 Mil.
Total Current Liabilities was $258 Mil.
Long-Term Debt was $25 Mil.
Net Income was 22.518 + 33 + 27.481 + 28.583 = $112 Mil.
Non Operating Income was 0 + 0 + 0 + 0 = $0 Mil.
Cash Flow from Operations was 77.116 + 54.468 + 61.671 + 43.514 = $237 Mil.
|Accounts Receivable was $35 Mil.
Revenue was 463.018 + 464.695 + 453.819 + 454.749 = $1,836 Mil.
Gross Profit was 86.764 + -240.276 + 196.569 + 88.774 = $132 Mil.
Total Current Assets was $211 Mil.
Total Assets was $1,071 Mil.
Property, Plant and Equipment(Net PPE) was $763 Mil.
Depreciation, Depletion and Amortization(DDA) was $75 Mil.
Selling, General & Admin. Expense(SGA) was $104 Mil.
Total Current Liabilities was $224 Mil.
Long-Term Debt was $0 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)|
|=||(41.493 / 1896.323)||/||(34.802 / 1836.281)|
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)|
|=||(-243.525 / 1836.281)||/||(86.986 / 1896.323)|
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 - (166.515 + 803.334) / 1073.756)||/||(1 - (211.112 + 762.884) / 1071.108)|
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))|
|=||(75.365 / (75.365 + 762.884))||/||(79.579 / (79.579 + 803.334))|
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)|
|=||(117.181 / 1896.323)||/||(104.28 / 1836.281)|
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 + 258.448) / 1073.756)||/||((0 + 223.747) / 1071.108)|
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|
|=||(111.582 - 0||-||236.769)||/||1073.756|
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 -2.95 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