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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 -1.57. The lowest was -10.87. And the median was -2.77.
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 * 1.0521||+||0.528 * 0.9773||+||0.404 * 0.9121||+||0.892 * 1.3325||+||0.115 * 1.007|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9954||+||4.679 * -0.0876||-||0.327 * 1.0467|
|This Year (Jun15) TTM:||Last Year (Jun14) TTM:|
|Accounts Receivable was €599 Mil.|
Revenue was 4349.28272298 + 4216.48341495 + 3895.53933496 + 3244.12198339 = €15,705 Mil.
Gross Profit was 2608.30437494 + 2498.10588561 + 2280.61638281 + 1907.03810041 = €9,294 Mil.
Total Current Assets was €4,242 Mil.
Total Assets was €11,466 Mil.
Property, Plant and Equipment(Net PPE) was €3,544 Mil.
Depreciation, Depletion and Amortization(DDA) was €759 Mil.
Selling, General & Admin. Expense(SGA) was €5,392 Mil.
Total Current Liabilities was €3,608 Mil.
Long-Term Debt was €2,092 Mil.
Net Income was 558.40684309 + 457.266931535 + 797.323600973 + 456.118569101 = €2,269 Mil.
Non Operating Income was 0 + 0 + 316.788321168 + 0 = €317 Mil.
Cash Flow from Operations was 693.486590038 + 531.922757091 + 1155.87996756 + 575.153255218 = €2,956 Mil.
|Accounts Receivable was €428 Mil.
Revenue was 3057.11341724 + 2800.80977514 + 3090.76328643 + 2837.76496143 = €11,786 Mil.
Gross Profit was 1797.45344815 + 1622.87614778 + 1782.09521032 + 1614.11130252 = €6,817 Mil.
Total Current Assets was €2,471 Mil.
Total Assets was €7,644 Mil.
Property, Plant and Equipment(Net PPE) was €2,483 Mil.
Depreciation, Depletion and Amortization(DDA) was €536 Mil.
Selling, General & Admin. Expense(SGA) was €4,066 Mil.
Total Current Liabilities was €2,123 Mil.
Long-Term Debt was €1,507 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)|
|=||(599.394101399 / 15705.4274563)||/||(427.541031869 / 11786.4514402)|
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)|
|=||(2498.10588561 / 11786.4514402)||/||(2608.30437494 / 15705.4274563)|
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 - (4241.91392676 + 3544.23950815) / 11466.4528201)||/||(1 - (2470.67049385 + 2483.03525429) / 7643.55634062)|
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))|
|=||(536.146106603 / (536.146106603 + 2483.03525429))||/||(758.800480492 / (758.800480492 + 3544.23950815))|
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)|
|=||(5392.39024402 / 15705.4274563)||/||(4065.71465122 / 11786.4514402)|
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)|
|=||((2091.59761205 + 3607.947964) / 11466.4528201)||/||((1507.39677633 + 2122.54360786) / 7643.55634062)|
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|
|=||(2269.1159447 - 316.788321168||-||2956.44256991)||/||11466.4528201|
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 -2.61 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