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Darden Restaurants Inc (NYSE:DRI)
Beneish M-Score
-2.54 (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 -2.54 suggests that the company is not a manipulator.

DRI' s 10-Year Beneish M-Score Range
Min: -3.95   Max: 2.79
Current: -2.54

-3.95
2.79

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 -2.76.


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 * 0.6289+0.528 * 1.0262+0.404 * 1.1879+0.892 * 1.2779+0.115 * 0.8934
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9903+4.679 * -0.0206-0.327 * 0.8358
=-2.54

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

This Year (Nov14) TTM:Last Year (Nov13) TTM:
Accounts Receivable was $67 Mil.
Revenue was 1559 + 1595.8 + 1650.1 + 2233.1 = $7,038 Mil.
Gross Profit was 289.3 + 313.2 + 334.1 + 472.2 = $1,409 Mil.
Total Current Assets was $719 Mil.
Total Assets was $5,788 Mil.
Property, Plant and Equipment(Net PPE) was $3,338 Mil.
Depreciation, Depletion and Amortization(DDA) was $250 Mil.
Selling, General & Admin. Expense(SGA) was $731 Mil.
Total Current Liabilities was $1,306 Mil.
Long-Term Debt was $1,519 Mil.
Net Income was -32.8 + -19.3 + 86.5 + 109.7 = $144 Mil.
Non Operating Income was -39.7 + -6.9 + -14.8 + 0 = $-61 Mil.
Cash Flow from Operations was 0 + 44.6 + -83.6 + 363.9 = $325 Mil.
Accounts Receivable was $83 Mil.
Revenue was 2049.9 + 1531.5 + -332 + 2258.2 = $5,508 Mil.
Gross Profit was 379.8 + 323.4 + -77.8 + 505.9 = $1,131 Mil.
Total Current Assets was $834 Mil.
Total Assets was $7,157 Mil.
Property, Plant and Equipment(Net PPE) was $4,522 Mil.
Depreciation, Depletion and Amortization(DDA) was $300 Mil.
Selling, General & Admin. Expense(SGA) was $578 Mil.
Total Current Liabilities was $1,647 Mil.
Long-Term Debt was $2,533 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)
=(66.7 / 7038) / (83 / 5507.6)
=0.00947712 / 0.01507008
=0.6289

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)
=(313.2 / 5507.6) / (289.3 / 7038)
=0.20540707 / 0.2001705
=1.0262

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 - (719.4 + 3338.3) / 5787.9) / (1 - (834.3 + 4521.8) / 7157.3)
=0.29893398 / 0.25165915
=1.1879

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
=7038 / 5507.6
=1.2779

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))
=(299.9 / (299.9 + 4521.8)) / (249.8 / (249.8 + 3338.3))
=0.06219798 / 0.06961902
=0.8934

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)
=(731.2 / 7038) / (577.8 / 5507.6)
=0.10389315 / 0.10490958
=0.9903

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)
=((1519.2 + 1306) / 5787.9) / ((2533.3 + 1646.5) / 7157.3)
=0.48812177 / 0.58399117
=0.8358

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
=(144.1 - -61.4 - 324.9) / 5787.9
=-0.0206

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 -2.54 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 1.14381.00211.20241.25840.49011.62461.04421.02370.70380.9952
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 -2.73-3.01-2.96-0.87-3.25-2.37-2.79-2.64-3.22-2.63

Darden Restaurants Inc Quarterly Data

Aug12Nov12Feb13May13Aug13Nov13Feb14May14Aug14Nov14
DSRI 0.86450.82861.16880.70382.03271.85721.53730.8380.77250.6289
GMI 1.00910.99271.01421.04161.10431.12841.12821.08941.05921.0262
AQI 0.99681.22061.21641.23541.20990.98460.98150.95631.12851.1879
SGI 1.05971.06191.04980.74020.66960.670.65911.26071.38971.2779
DEPI 0.99011.00980.99261.3621.4811.27461.27310.72160.65630.8934
SGAI 0.99141.01561.02521.13151.09381.06361.09660.97340.95710.9903
LVGI 1.07431.04341.02321.03521.03560.97310.98291.0230.87370.8358
TATA -0.0693-0.0716-0.0677-0.0774-0.0765-0.0874-0.0819-0.0396-0.0315-0.0206
M-score -2.90-2.85-2.51-3.22-2.02-2.30-2.59-2.59-2.40-2.54
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