Switch to:
GuruFocus has detected 2 Warning Signs with Brinker International Inc $EAT.
More than 500,000 people have already joined GuruFocus to track the stocks they follow and exchange investment ideas.
Brinker International Inc (NYSE:EAT)
Beneish M-Score
-3.10 (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.

Brinker International Inc has a M-score of -3.10 suggests that the company is not a manipulator.

EAT' s Beneish M-Score Range Over the Past 10 Years
Min: -6.27   Max: 2.43
Current: -3.1

-6.27
2.43

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 -3.05.


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 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 * 0.9883+0.528 * 1.0597+0.404 * 1.0583+0.892 * 1.044+0.115 * 0.9334
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9098+4.679 * -0.1356-0.327 * 1.2388
=-3.10

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

This Year (Dec16) TTM:Last Year (Dec15) TTM:
Accounts Receivable was $90 Mil.
Revenue was 771.043 + 758.492 + 881.681 + 824.639 = $3,236 Mil.
Gross Profit was 135.683 + 118.977 + 182.496 + 159.36 = $597 Mil.
Total Current Assets was $224 Mil.
Total Assets was $1,498 Mil.
Property, Plant and Equipment(Net PPE) was $1,018 Mil.
Depreciation, Depletion and Amortization(DDA) was $156 Mil.
Selling, General & Admin. Expense(SGA) was $130 Mil.
Total Current Liabilities was $470 Mil.
Long-Term Debt was $1,416 Mil.
Net Income was 34.637 + 23.233 + 62.342 + 57.502 = $178 Mil.
Non Operating Income was 0.383 + 0.299 + 0.375 + 0.277 = $1 Mil.
Cash Flow from Operations was 74.916 + 66.22 + 95.119 + 143.342 = $380 Mil.
Accounts Receivable was $88 Mil.
Revenue was 788.61 + 762.559 + 764.147 + 784.215 = $3,100 Mil.
Gross Profit was 146.555 + 130.206 + 162.212 + 166.539 = $606 Mil.
Total Current Assets was $254 Mil.
Total Assets was $1,580 Mil.
Property, Plant and Equipment(Net PPE) was $1,071 Mil.
Depreciation, Depletion and Amortization(DDA) was $152 Mil.
Selling, General & Admin. Expense(SGA) was $137 Mil.
Total Current Liabilities was $449 Mil.
Long-Term Debt was $1,156 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)
=(90.495 / 3235.855) / (87.706 / 3099.531)
=0.02796633 / 0.02829654
=0.9883

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)
=(605.512 / 3099.531) / (596.516 / 3235.855)
=0.19535601 / 0.18434571
=1.0597

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 - (224.268 + 1018.221) / 1498.105) / (1 - (253.938 + 1071.232) / 1579.884)
=0.17062622 / 0.16122323
=1.0583

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
=3235.855 / 3099.531
=1.044

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))
=(151.913 / (151.913 + 1071.232)) / (156.274 / (156.274 + 1018.221))
=0.12419868 / 0.13305633
=0.9334

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)
=(129.885 / 3235.855) / (136.743 / 3099.531)
=0.04013931 / 0.04411732
=0.9098

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)
=((1416.212 + 469.804) / 1498.105) / ((1156.493 + 449.01) / 1579.884)
=1.25893445 / 1.01621575
=1.2388

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
=(177.714 - 1.334 - 379.597) / 1498.105
=-0.1356

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 -3.10 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 local exchange's currency.

Brinker International Inc Annual Data

Jun07Jun08Jun09Jun10Jun11Jun12Jun13Jun14Jun15Jun16
DSRI 0.89991.08431.22361.0450.98120.99271.00571.06320.94350.8693
GMI 0.24261.0064.56740.98530.92070.95780.95260.98550.9711.043
AQI 0.92441.2170.97331.30211.16310.98521.09390.99731.0071.1379
SGI 1.05430.96760.77360.87250.9661.02151.01031.0211.03191.085
DEPI 0.83931.17221.03750.8750.99051.01320.950.98710.92490.9464
SGAI 12.04671.00920.07421.05981.04731.05120.91450.96130.97210.896
LVGI 1.31761.10060.89520.90231.16281.12391.17291.08021.11081.0852
TATA -0.1122-0.1431-0.1053-0.1105-0.0843-0.1084-0.0895-0.1396-0.1212-0.1327
M-score -5.50-3.02-0.90-2.95-2.96-3.05-2.92-3.09-3.12-3.08

Brinker International Inc Quarterly Data

Sep14Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16Dec16
DSRI 1.2651.11030.9530.94350.91870.83710.90330.86930.99720.9883
GMI 0.9850.9760.98020.9710.97780.9961.02841.0431.0551.0597
AQI 1.01230.9740.97331.0071.15411.14131.10131.13790.99931.0583
SGI 1.02981.03711.03981.03191.04021.04251.04731.0851.06541.044
DEPI 0.97710.96250.93930.92490.96530.95690.94980.94640.91540.9334
SGAI 0.96040.9750.99030.97210.99650.97340.92520.8960.87830.9098
LVGI 1.07451.0991.09581.11081.10771.11511.15041.08521.30641.2388
TATA -0.149-0.1408-0.1332-0.1212-0.0957-0.1017-0.1338-0.1327-0.1548-0.1356
M-score -2.93-3.06-3.17-3.12-2.95-3.05-3.14-3.08-3.21-3.10
Get WordPress Plugins for easy affiliate links on Stock Tickers and Guru Names | Earn affiliate commissions by embedding GuruFocus Charts
GuruFocus Affiliate Program: Earn up to $400 per referral. ( Learn More)
FEEDBACK