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Darden Restaurants Inc (NYSE:DRI)
Beneish M-Score
-2.61 (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.

Darden Restaurants Inc has a M-score of -2.61 suggests that the company is not a manipulator.

DRI' s 10-Year Beneish M-Score Range
Min: -3.25   Max: -0.87
Current: -2.61

-3.25
-0.87

During the past 13 years, the highest Beneish M-Score of Darden Restaurants Inc was -0.87. The lowest was -3.25. And the median was -2.78.


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 Darden Restaurants 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 * 0.718+0.528 * 1.0848+0.404 * 0.9563+0.892 * 1.3666+0.115 * 0.7216
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9734+4.679 * -0.0398-0.327 * 1.023
=-2.61

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

This Year (May14) TTM:Last Year (May13) TTM:
Accounts Receivable was $84 Mil.
Revenue was 1650.1 + 2233.1 + 2049.9 + 2158.5 = $8,092 Mil.
Gross Profit was 334.1 + 472.2 + 379.8 + 457.2 = $1,643 Mil.
Total Current Assets was $1,976 Mil.
Total Assets was $7,101 Mil.
Property, Plant and Equipment(Net PPE) was $3,381 Mil.
Depreciation, Depletion and Amortization(DDA) was $304 Mil.
Selling, General & Admin. Expense(SGA) was $832 Mil.
Total Current Liabilities was $1,619 Mil.
Long-Term Debt was $2,533 Mil.
Net Income was 86.5 + 109.7 + 19.8 + 70.2 = $286 Mil.
Non Operating Income was -14.8 + 0 + 0 + 0 = $-15 Mil.
Cash Flow from Operations was -83.6 + 363.9 + 86 + 217 = $583 Mil.
Accounts Receivable was $85 Mil.
Revenue was -332 + 2258.2 + 1960 + 2034.8 = $5,921 Mil.
Gross Profit was -77.8 + 505.9 + 391.3 + 485 = $1,304 Mil.
Total Current Assets was $765 Mil.
Total Assets was $6,937 Mil.
Property, Plant and Equipment(Net PPE) was $4,391 Mil.
Depreciation, Depletion and Amortization(DDA) was $278 Mil.
Selling, General & Admin. Expense(SGA) was $625 Mil.
Total Current Liabilities was $1,416 Mil.
Long-Term Debt was $2,549 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)
=(83.8 / 8091.6) / (85.4 / 5921)
=0.01035642 / 0.01442324
=0.718

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)
=(472.2 / 5921) / (334.1 / 8091.6)
=0.22030062 / 0.20308715
=1.0848

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 - (1976.4 + 3381) / 7100.7) / (1 - (764.9 + 4391.1) / 6936.9)
=0.24551101 / 0.25672851
=0.9563

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
=8091.6 / 5921
=1.3666

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))
=(278.3 / (278.3 + 4391.1)) / (304.4 / (304.4 + 3381))
=0.05960081 / 0.08259619
=0.7216

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)
=(831.9 / 8091.6) / (625.4 / 5921)
=0.10281032 / 0.10562405
=0.9734

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)
=((2533.4 + 1618.5) / 7100.7) / ((2548.7 + 1416.4) / 6936.9)
=0.584717 / 0.57159538
=1.023

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
=(286.2 - -14.8 - 583.3) / 7100.7
=-0.0398

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.

Darden Restaurants Inc has a M-score of -2.61 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.

Darden Restaurants Inc Annual Data

May05May06May07May08May09May10May11May12May13May14
DSRI 1.14381.00211.20241.25840.49011.62461.04421.02371.61580.9243
GMI 0.98190.95550.99761.04671.02520.95620.95391.04621.04161.0692
AQI 0.92381.01670.84594.82620.91540.96760.9640.96211.23540.9563
SGI 1.05491.01431.03991.19031.08920.98551.05441.06650.74021.0616
DEPI 1.01261.15190.89251.14140.94080.97091.00990.99081.3620.7216
SGAI 0.99891.0031.02041.00390.95231.04351.0290.94291.13130.9994
LVGI 0.98751.0641.0761.10070.9270.91440.99181.09761.03521.023
TATA -0.0849-0.1113-0.1267-0.0755-0.0816-0.0931-0.0762-0.0481-0.0774-0.0393
M-score -2.73-3.01-2.96-0.87-3.25-2.37-2.79-2.64-2.38-2.70

Darden Restaurants Inc Quarterly Data

May12Aug12Nov12Feb13May13Aug13Nov13Feb14May14Aug14
DSRI 1.02370.86450.82861.16881.61581.82191.66741.37960.7180.8619
GMI 1.04621.00910.99271.01421.04161.1031.1241.12061.08481.0605
AQI 0.96210.99681.22061.21641.23541.20990.98460.98150.95631.1285
SGI 1.06651.05971.06191.04980.74020.7470.74630.73441.36661.2455
DEPI 0.99080.99011.00980.99261.3621.32921.27461.27310.72160.8075
SGAI 0.9430.99141.01561.02521.13151.09061.06131.0920.97340.96
LVGI 1.09761.07431.04341.02321.03521.03560.97310.98291.0230.8737
TATA -0.0481-0.0693-0.0716-0.0677-0.0774-0.0766-0.0876-0.0821-0.0398-0.0315
M-score -2.64-2.90-2.85-2.51-2.38-2.16-2.41-2.67-2.61-2.43
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