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Darden Restaurants Inc (NYSE:DRI)
Beneish M-Score
-2.66 (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 -2.66 suggests that the company is not a manipulator.

DRI' s Beneish M-Score Range Over the Past 10 Years
Min: -3.95   Max: 2.73
Current: -2.66

-3.95
2.73

During the past 13 years, the highest Beneish M-Score of Darden Restaurants Inc was 2.73. The lowest was -3.95. And the median was -2.77.


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 * 0.7825+0.528 * 0.9099+0.404 * 1.3191+0.892 * 1.0743+0.115 * 0.6822
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9226+4.679 * -0.0381-0.327 * 0.7643
=-2.66

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

This Year (Feb16) TTM:Last Year (Feb15) TTM:
Accounts Receivable was $54 Mil.
Revenue was 1847.5 + 1608.8 + 1687 + 1878.3 = $7,022 Mil.
Gross Profit was 432 + 324.9 + 376.3 + 431.4 = $1,565 Mil.
Total Current Assets was $730 Mil.
Total Assets was $4,502 Mil.
Property, Plant and Equipment(Net PPE) was $2,058 Mil.
Depreciation, Depletion and Amortization(DDA) was $304 Mil.
Selling, General & Admin. Expense(SGA) was $654 Mil.
Total Current Liabilities was $1,201 Mil.
Long-Term Debt was $440 Mil.
Net Income was 105.8 + 43.2 + 86.4 + 105.3 = $341 Mil.
Non Operating Income was 0 + 0 + 0 + 0 = $0 Mil.
Cash Flow from Operations was 406.6 + 52.6 + 138 + -85 = $512 Mil.
Accounts Receivable was $64 Mil.
Revenue was 1730.9 + 1559 + 1595.8 + 1650.1 = $6,536 Mil.
Gross Profit was 388.6 + 289.3 + 313.2 + 334 = $1,325 Mil.
Total Current Assets was $982 Mil.
Total Assets was $6,003 Mil.
Property, Plant and Equipment(Net PPE) was $3,289 Mil.
Depreciation, Depletion and Amortization(DDA) was $317 Mil.
Selling, General & Admin. Expense(SGA) was $660 Mil.
Total Current Liabilities was $1,351 Mil.
Long-Term Debt was $1,512 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)
=(53.8 / 7021.6) / (64 / 6535.8)
=0.00766207 / 0.00979222
=0.7825

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)
=(1325.1 / 6535.8) / (1564.6 / 7021.6)
=0.20274488 / 0.22282671
=0.9099

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 - (729.9 + 2058.1) / 4501.9) / (1 - (981.9 + 3288.5) / 6002.9)
=0.38070592 / 0.2886105
=1.3191

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
=7021.6 / 6535.8
=1.0743

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))
=(316.8 / (316.8 + 3288.5)) / (304.3 / (304.3 + 2058.1))
=0.08787063 / 0.12880969
=0.6822

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)
=(653.8 / 7021.6) / (659.6 / 6535.8)
=0.09311268 / 0.10092108
=0.9226

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)
=((439.7 + 1201.1) / 4501.9) / ((1511.8 + 1350.8) / 6002.9)
=0.36446834 / 0.47686951
=0.7643

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
=(340.7 - 0 - 512.2) / 4501.9
=-0.0381

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 -2.66 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

May06May07May08May09May10May11May12May13May14May15
DSRI 0.93781.28481.25840.49011.62461.04421.02370.48731.44831.1053
GMI 0.99090.96191.04671.02520.95620.95391.04621.03781.07310.9797
AQI 1.01670.84594.82620.91540.96760.9640.96211.23540.94921.1792
SGI 1.08380.97321.19031.08920.98551.05441.06651.06920.7351.0761
DEPI 1.00081.02741.13160.94890.97091.00990.99080.98410.99870.9145
SGAI 0.99481.02421.00840.95231.04351.02250.94891.06181.06480.9433
LVGI 1.0641.0761.10070.9270.91440.99181.09761.03521.00830.7667
TATA -0.1259-0.1398-0.0755-0.0816-0.0943-0.0753-0.0482-0.0775-0.06570.0398
M-score -3.07-3.00-0.87-3.25-2.38-2.78-2.64-3.16-2.61-1.99

Darden Restaurants Inc Quarterly Data

Nov13Feb14May14Aug14Nov14Feb15May15Aug15Nov15Feb16
DSRI 1.39671.32951.00280.91590.61840.61081.10530.65340.88280.7825
GMI 1.12471.10611.06911.04241.04481.01250.97980.93380.9110.9099
AQI 0.98460.98150.94921.12471.18791.15621.17921.00311.1131.3191
SGI 0.89090.76211.06161.17211.29941.51871.07611.07961.0751.0743
DEPI 1.16591.33370.72160.65630.57830.50950.91450.89180.64790.6822
SGAI 0.9871.05161.00280.98330.97940.89440.94030.94930.88860.9226
LVGI 0.97310.98291.00830.87970.83580.82520.76670.83990.89140.7643
TATA -0.0756-0.0598-0.06830.0144-0.0146-0.02170.0398-0.0397-0.0183-0.0381
M-score -2.48-2.59-2.76-2.26-2.52-2.39-1.99-2.90-2.59-2.66
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