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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 -10.99. And the median was -2.76.
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 * 0.8757||+||0.528 * 0.9865||+||0.404 * 1.0559||+||0.892 * 1.2589||+||0.115 * 0.8294|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0049||+||4.679 * -0.1077||-||0.327 * 1.1886|
|This Year (Mar16) TTM:||Last Year (Mar15) TTM:|
|Accounts Receivable was €668 Mil.|
Revenue was 4483.8362069 + 4932.98448545 + 4379.22124209 + 4349.28272298 = €18,145 Mil.
Gross Profit was 2678.60991379 + 2926.00752777 + 2612.67040898 + 2608.30437494 = €10,826 Mil.
Total Current Assets was €3,487 Mil.
Total Assets was €11,242 Mil.
Property, Plant and Equipment(Net PPE) was €3,814 Mil.
Depreciation, Depletion and Amortization(DDA) was €899 Mil.
Selling, General & Admin. Expense(SGA) was €6,274 Mil.
Total Current Liabilities was €3,907 Mil.
Long-Term Debt was €2,198 Mil.
Net Income was 516.433189655 + 631.231065822 + 581.395348837 + 558.40684309 = €2,287 Mil.
Non Operating Income was 0 + 0 + -54.4417713624 + 0 = €-54 Mil.
Cash Flow from Operations was 493.444683908 + 1501.88194253 + 864.207431168 + 693.486590038 = €3,553 Mil.
|Accounts Receivable was €606 Mil.
Revenue was 4216.48341495 + 3895.53933496 + 3244.12198339 + 3057.11341724 = €14,413 Mil.
Gross Profit was 2498.10588561 + 2280.61638281 + 1907.03810041 + 1797.45344815 = €8,483 Mil.
Total Current Assets was €3,923 Mil.
Total Assets was €11,264 Mil.
Property, Plant and Equipment(Net PPE) was €3,601 Mil.
Depreciation, Depletion and Amortization(DDA) was €677 Mil.
Selling, General & Admin. Expense(SGA) was €4,959 Mil.
Total Current Liabilities was €3,253 Mil.
Long-Term Debt was €1,893 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)|
|=||(667.834051724 / 18145.3246574)||/||(605.747020235 / 14413.2581505)|
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)|
|=||(8483.21381698 / 14413.2581505)||/||(10825.5922255 / 18145.3246574)|
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 - (3487.33836207 + 3813.66738506) / 11242.2772989)||/||(1 - (3922.57229973 + 3601.3120207) / 11263.6976809)|
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))|
|=||(676.537919461 / (676.537919461 + 3601.3120207))||/||(898.546512088 / (898.546512088 + 3813.66738506))|
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)|
|=||(6273.65513806 / 18145.3246574)||/||(4958.8413584 / 14413.2581505)|
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)|
|=||((2197.91666667 + 3907.32758621) / 11242.2772989)||/||((1892.72844867 + 3253.44174443) / 11263.6976809)|
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|
|=||(2287.4664474 - -54.4417713624||-||3553.02064765)||/||11242.2772989|
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 -2.93 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
Starbucks Corp Annual Data
Starbucks Corp Quarterly Data