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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 Starbucks Corp was -1.62. The lowest was -3.99. And the median was -2.91.
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 Starbucks Corp 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 * 0.9473||+||0.528 * 0.982||+||0.404 * 1.1289||+||0.892 * 1.3812||+||0.115 * 0.9172|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0089||+||4.679 * -0.1004||-||0.327 * 1.0192|
|This Year (Sep15) TTM:||Last Year (Sep14) TTM:|
|Accounts Receivable was €641 Mil.|
Revenue was 4379.22124209 + 4349.28272298 + 4216.48341495 + 3895.53933496 = €16,841 Mil.
Gross Profit was 2612.67040898 + 2608.30437494 + 2498.10588561 + 2280.61638281 = €10,000 Mil.
Total Current Assets was €3,878 Mil.
Total Assets was €11,090 Mil.
Property, Plant and Equipment(Net PPE) was €3,643 Mil.
Depreciation, Depletion and Amortization(DDA) was €822 Mil.
Selling, General & Admin. Expense(SGA) was €5,812 Mil.
Total Current Liabilities was €3,255 Mil.
Long-Term Debt was €2,092 Mil.
Net Income was 581.395348837 + 558.40684309 + 457.266931535 + 797.323600973 = €2,394 Mil.
Non Operating Income was -54.4417713624 + 0 + 0 + 316.788321168 = €262 Mil.
Cash Flow from Operations was 864.207431168 + 693.486590038 + 531.922757091 + 1155.87996756 = €3,245 Mil.
|Accounts Receivable was €490 Mil.
Revenue was 3244.12198339 + 3057.11341724 + 2800.80977514 + 3090.76328643 = €12,193 Mil.
Gross Profit was 1907.03810041 + 1797.45344815 + 1622.87614778 + 1782.09521032 = €7,109 Mil.
Total Current Assets was €3,235 Mil.
Total Assets was €8,344 Mil.
Property, Plant and Equipment(Net PPE) was €2,731 Mil.
Depreciation, Depletion and Amortization(DDA) was €555 Mil.
Selling, General & Admin. Expense(SGA) was €4,171 Mil.
Total Current Liabilities was €2,358 Mil.
Long-Term Debt was €1,589 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)|
|=||(640.648667914 / 16840.526715)||/||(489.640723209 / 12192.8084622)|
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)|
|=||(2608.30437494 / 12192.8084622)||/||(2612.67040898 / 16840.526715)|
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 - (3878.37476611 + 3642.78713357) / 11089.8155573)||/||(1 - (3234.81027392 + 2730.65880345) / 8343.99006751)|
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))|
|=||(554.945766387 / (554.945766387 + 2730.65880345))||/||(822.242865769 / (822.242865769 + 3642.78713357))|
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)|
|=||(5812.31663992 / 16840.526715)||/||(4171.1570441 / 12192.8084622)|
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)|
|=||((2091.68671478 + 3255.36843981) / 11089.8155573)||/||((1589.43120975 + 2357.95763172) / 8343.99006751)|
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|
|=||(2394.39272444 - 262.346549806||-||3245.49674586)||/||11089.8155573|
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.
Starbucks Corp has a M-score of -2.63 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
Starbucks Corp Annual Data
Starbucks Corp Quarterly Data