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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 -3.05.
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|
|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
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)|
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)|
|=||(605.512 / 3099.531)||/||(596.516 / 3235.855)|
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 - (224.268 + 1018.221) / 1498.105)||/||(1 - (253.938 + 1071.232) / 1579.884)|
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))|
|=||(151.913 / (151.913 + 1071.232))||/||(156.274 / (156.274 + 1018.221))|
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)|
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)|
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|
|=||(177.714 - 1.334||-||379.597)||/||1498.105|
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.
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