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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 -3.02.
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 * 1.1097||+||0.528 * 0.9766||+||0.404 * 0.974||+||0.892 * 1.0377||+||0.115 * 0.9625|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9698||+||4.679 * -0.1408||-||0.327 * 1.099|
|This Year (Dec14) TTM:||Last Year (Dec13) TTM:|
|Accounts Receivable was $101 Mil.|
Revenue was 742.898 + 711.018 + 758.725 + 758.408 = $2,971 Mil.
Gross Profit was 142.505 + 123.419 + 155.043 + 157.505 = $578 Mil.
Total Current Assets was $285 Mil.
Total Assets was $1,550 Mil.
Property, Plant and Equipment(Net PPE) was $1,045 Mil.
Depreciation, Depletion and Amortization(DDA) was $141 Mil.
Selling, General & Admin. Expense(SGA) was $138 Mil.
Total Current Liabilities was $511 Mil.
Long-Term Debt was $901 Mil.
Net Income was 41.306 + 32.738 + 28.82 + 56.263 = $159 Mil.
Non Operating Income was 0.611 + 0.503 + 0.478 + 0.693 = $2 Mil.
Cash Flow from Operations was 91.567 + 70.898 + 82.742 + 129.779 = $375 Mil.
|Accounts Receivable was $87 Mil.
Revenue was 705.662 + 684.66 + 730.068 + 742.759 = $2,863 Mil.
Gross Profit was 129.42 + 117.596 + 149.312 + 148.084 = $544 Mil.
Total Current Assets was $247 Mil.
Total Assets was $1,490 Mil.
Property, Plant and Equipment(Net PPE) was $1,026 Mil.
Depreciation, Depletion and Amortization(DDA) was $133 Mil.
Selling, General & Admin. Expense(SGA) was $137 Mil.
Total Current Liabilities was $429 Mil.
Long-Term Debt was $806 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)|
|=||(100.501 / 2971.049)||/||(87.277 / 2863.149)|
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)|
|=||(123.419 / 2863.149)||/||(142.505 / 2971.049)|
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 - (285.453 + 1045.447) / 1549.831)||/||(1 - (247.141 + 1026.402) / 1489.568)|
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))|
|=||(132.567 / (132.567 + 1026.402))||/||(141.001 / (141.001 + 1045.447))|
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)|
|=||(137.765 / 2971.049)||/||(136.89 / 2863.149)|
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)|
|=||((901.241 + 511.109) / 1549.831)||/||((806.215 + 428.955) / 1489.568)|
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|
|=||(159.127 - 2.285||-||374.986)||/||1549.831|
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 -3.06 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