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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.
During the past 13 years, the highest Beneish M-Score of Brinker International Inc was 2.43. The lowest was -6.27. And the median was -3.04.
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 Brinker International 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 * 0.9972||+||0.528 * 1.055||+||0.404 * 0.9993||+||0.892 * 1.0654||+||0.115 * 0.9154|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.8783||+||4.679 * -0.1548||-||0.327 * 1.3064|
|This Year (Sep16) TTM:||Last Year (Sep15) TTM:|
|Accounts Receivable was $39 Mil.|
Revenue was 758.492 + 881.681 + 824.639 + 788.61 = $3,253 Mil.
Gross Profit was 118.977 + 182.496 + 159.36 + 146.555 = $607 Mil.
Total Current Assets was $174 Mil.
Total Assets was $1,459 Mil.
Property, Plant and Equipment(Net PPE) was $1,028 Mil.
Depreciation, Depletion and Amortization(DDA) was $156 Mil.
Selling, General & Admin. Expense(SGA) was $128 Mil.
Total Current Liabilities was $426 Mil.
Long-Term Debt was $1,442 Mil.
Net Income was 23.233 + 62.342 + 57.502 + 47.694 = $191 Mil.
Non Operating Income was 0.299 + 0.375 + 0.277 + 0.56 = $2 Mil.
Cash Flow from Operations was 66.22 + 95.119 + 144.016 + 109.679 = $415 Mil.
|Accounts Receivable was $37 Mil.
Revenue was 762.559 + 764.147 + 784.215 + 742.898 = $3,054 Mil.
Gross Profit was 130.206 + 162.212 + 166.539 + 142.505 = $601 Mil.
Total Current Assets was $192 Mil.
Total Assets was $1,549 Mil.
Property, Plant and Equipment(Net PPE) was $1,085 Mil.
Depreciation, Depletion and Amortization(DDA) was $149 Mil.
Selling, General & Admin. Expense(SGA) was $137 Mil.
Total Current Liabilities was $393 Mil.
Long-Term Debt was $1,125 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)|
|=||(39.035 / 3253.422)||/||(36.744 / 3053.819)|
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)|
|=||(601.462 / 3053.819)||/||(607.388 / 3253.422)|
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 - (174.453 + 1028.108) / 1458.526)||/||(1 - (192.197 + 1085.041) / 1549.331)|
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))|
|=||(148.871 / (148.871 + 1085.041))||/||(156.083 / (156.083 + 1028.108))|
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)|
|=||(128.457 / 3253.422)||/||(137.285 / 3053.819)|
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)|
|=||((1441.979 + 425.621) / 1458.526)||/||((1125.41 + 393.153) / 1549.331)|
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|
|=||(190.771 - 1.511||-||415.034)||/||1458.526|
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.
Brinker International Inc has a M-score of -3.21 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
Brinker International Inc Annual Data
Brinker International Inc Quarterly Data