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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 -3.03.
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 * 0.9531||+||0.528 * 0.9801||+||0.404 * 0.9733||+||0.892 * 1.0397||+||0.115 * 0.9393|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9881||+||4.679 * -0.1332||-||0.327 * 1.0958|
|This Year (Mar15) TTM:||Last Year (Mar14) TTM:|
|Accounts Receivable was $43 Mil.|
Revenue was 784.215 + 742.898 + 711.018 + 755.837 = $2,994 Mil.
Gross Profit was 166.539 + 142.505 + 123.419 + 155.043 = $588 Mil.
Total Current Assets was $190 Mil.
Total Assets was $1,437 Mil.
Property, Plant and Equipment(Net PPE) was $1,037 Mil.
Depreciation, Depletion and Amortization(DDA) was $143 Mil.
Selling, General & Admin. Expense(SGA) was $139 Mil.
Total Current Liabilities was $407 Mil.
Long-Term Debt was $933 Mil.
Net Income was 65.427 + 41.306 + 32.738 + 28.82 = $168 Mil.
Non Operating Income was 0.454 + 0.611 + 0.503 + 0.478 = $2 Mil.
Cash Flow from Operations was 112.442 + 91.567 + 70.898 + 82.742 = $358 Mil.
|Accounts Receivable was $43 Mil.
Revenue was 759.293 + 705.662 + 684.66 + 730.068 = $2,880 Mil.
Gross Profit was 157.505 + 129.42 + 117.596 + 149.312 = $554 Mil.
Total Current Assets was $195 Mil.
Total Assets was $1,450 Mil.
Property, Plant and Equipment(Net PPE) was $1,037 Mil.
Depreciation, Depletion and Amortization(DDA) was $134 Mil.
Selling, General & Admin. Expense(SGA) was $136 Mil.
Total Current Liabilities was $416 Mil.
Long-Term Debt was $817 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)|
|=||(43.083 / 2993.968)||/||(43.476 / 2879.683)|
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)|
|=||(142.505 / 2879.683)||/||(166.539 / 2993.968)|
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 - (190.046 + 1037.425) / 1437.319)||/||(1 - (195.156 + 1037.409) / 1450.078)|
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))|
|=||(133.563 / (133.563 + 1037.409))||/||(143.382 / (143.382 + 1037.425))|
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)|
|=||(139.343 / 2993.968)||/||(135.644 / 2879.683)|
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)|
|=||((933.207 + 406.641) / 1437.319)||/||((817.259 + 416.294) / 1450.078)|
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|
|=||(168.291 - 2.046||-||357.649)||/||1437.319|
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 -3.17 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