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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.
Darden Restaurants Inc has a M-score of -2.82 suggests that the company is not a manipulator.
During the past 13 years, the highest Beneish M-Score of Darden Restaurants Inc was 2.79. The lowest was -3.95. And the median was -2.77.
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 * 0.9243||+||0.528 * 1.0692||+||0.404 * 0.9563||+||0.892 * 1.0616||+||0.115 * 0.7216|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9992||+||4.679 * -0.0656||-||0.327 * 1.023|
|This Year (May14) TTM:||Last Year (May13) TTM:|
|Accounts Receivable was $84 Mil.|
Revenue was -155.9 + 2233.1 + 2049.9 + 2158.5 = $6,286 Mil.
Gross Profit was -14.1 + 472.2 + 379.8 + 457.2 = $1,295 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 $663 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 -18.3 + 0 + 0 + 0 = $-18 Mil.
Cash Flow from Operations was 103.4 + 363.7 + 86 + 217 = $770 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
A large increase in DSR could be indicative of revenue inflation.
|DSRI||=||(Receivables_t / Revenue_t)||/||(Receivables_t-1 / Revenue_t-1)|
|=||(83.8 / 6285.6)||/||(85.4 / 5921)|
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)|
|=||(472.2 / 5921)||/||(-14.1 / 6285.6)|
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 - (1976.4 + 3381) / 7100.7)||/||(1 - (764.9 + 4391.1) / 6936.9)|
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))|
|=||(278.3 / (278.3 + 4391.1))||/||(304.4 / (304.4 + 3381))|
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)|
|=||(663.4 / 6285.6)||/||(625.4 / 5921)|
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)|
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|
|=||(286.2 - -18.3||-||770.1)||/||7100.7|
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 -2.82 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
Darden Restaurants Inc Annual Data
Darden Restaurants Inc Quarterly Data