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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.
Brinker International Inc has a M-score of -2.93 suggests that the company is not a 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 * 1.2648||+||0.528 * 0.9852||+||0.404 * 1.0123||+||0.892 * 1.03||+||0.115 * 0.9771|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9562||+||4.679 * -0.149||-||0.327 * 1.0745|
|This Year (Sep14) TTM:||Last Year (Sep13) TTM:|
|Accounts Receivable was $38 Mil.|
Revenue was 711.018 + 758.725 + 758.408 + 704.395 = $2,933 Mil.
Gross Profit was 123.419 + 155.043 + 157.505 + 129.42 = $565 Mil.
Total Current Assets was $201 Mil.
Total Assets was $1,476 Mil.
Property, Plant and Equipment(Net PPE) was $1,050 Mil.
Depreciation, Depletion and Amortization(DDA) was $138 Mil.
Selling, General & Admin. Expense(SGA) was $135 Mil.
Total Current Liabilities was $441 Mil.
Long-Term Debt was $865 Mil.
Net Income was 32.738 + 28.82 + 56.263 + 39.744 = $158 Mil.
Non Operating Income was 0.503 + 0.478 + 0.693 + 0.461 = $2 Mil.
Cash Flow from Operations was 70.898 + 82.742 + 129.779 + 91.905 = $375 Mil.
|Accounts Receivable was $30 Mil.
Revenue was 684.66 + 730.068 + 742.759 + 689.764 = $2,847 Mil.
Gross Profit was 117.596 + 149.312 + 148.084 + 125.805 = $541 Mil.
Total Current Assets was $190 Mil.
Total Assets was $1,433 Mil.
Property, Plant and Equipment(Net PPE) was $1,028 Mil.
Depreciation, Depletion and Amortization(DDA) was $132 Mil.
Selling, General & Admin. Expense(SGA) was $138 Mil.
Total Current Liabilities was $367 Mil.
Long-Term Debt was $813 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)|
|=||(38.452 / 2932.546)||/||(29.518 / 2847.251)|
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)|
|=||(155.043 / 2847.251)||/||(123.419 / 2932.546)|
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 - (201.107 + 1050.476) / 1476.211)||/||(1 - (189.675 + 1028.079) / 1433.182)|
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))|
|=||(132.008 / (132.008 + 1028.079))||/||(138.467 / (138.467 + 1050.476))|
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)|
|=||(135.467 / 2932.546)||/||(137.558 / 2847.251)|
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)|
|=||((865.272 + 440.897) / 1476.211)||/||((813.268 + 366.892) / 1433.182)|
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|
|=||(157.565 - 2.135||-||375.324)||/||1476.211|
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 -2.93 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