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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 -2.82.
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 * 1.0622||+||0.528 * 0.9886||+||0.404 * 1.1105||+||0.892 * 1.1002||+||0.115 * 1.0272|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0175||+||4.679 * -0.1073||-||0.327 * 1.0996|
|This Year (Dec16) TTM:||Last Year (Dec15) TTM:|
|Accounts Receivable was €820 Mil.|
Revenue was 5434.54355863 + 5088.83542725 + 4661.80135279 + 4483.8362069 = €19,669 Mil.
Gross Profit was 3258.98189402 + 3080.28156464 + 2828.14168743 + 2678.60991379 = €11,846 Mil.
Total Current Assets was €4,376 Mil.
Total Assets was €13,288 Mil.
Property, Plant and Equipment(Net PPE) was €4,245 Mil.
Depreciation, Depletion and Amortization(DDA) was €949 Mil.
Selling, General & Admin. Expense(SGA) was €6,903 Mil.
Total Current Liabilities was €4,168 Mil.
Long-Term Debt was €3,020 Mil.
Net Income was 712.674187127 + 713.623808251 + 671.146315415 + 516.433189655 = €2,614 Mil.
Non Operating Income was 0 + 0 + 0 + 0 = €0 Mil.
Cash Flow from Operations was 1417.85951275 + 1165.64198521 + 962.442150231 + 493.444683908 = €4,039 Mil.
|Accounts Receivable was €702 Mil.
Revenue was 4932.98448545 + 4379.22124209 + 4349.28272298 + 4216.48341495 = €17,878 Mil.
Gross Profit was 2926.00752777 + 2612.67040898 + 2608.30437494 + 2498.10588561 = €10,645 Mil.
Total Current Assets was €4,340 Mil.
Total Assets was €11,882 Mil.
Property, Plant and Equipment(Net PPE) was €3,785 Mil.
Depreciation, Depletion and Amortization(DDA) was €874 Mil.
Selling, General & Admin. Expense(SGA) was €6,167 Mil.
Total Current Liabilities was €4,058 Mil.
Long-Term Debt was €1,788 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)|
|=||(820.077732486 / 19669.0165456)||/||(701.735059212 / 17877.9718655)|
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)|
|=||(10645.0881973 / 17877.9718655)||/||(11846.0150599 / 19669.0165456)|
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 - (4375.95980662 + 4245.42610674) / 13287.7997914)||/||(1 - (4340.12668686 + 3784.54053062) / 11882.4015423)|
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))|
|=||(873.843605815 / (873.843605815 + 3784.54053062))||/||(948.555453474 / (948.555453474 + 4245.42610674))|
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)|
|=||(6902.90849673 / 19669.0165456)||/||(6166.57349766 / 17877.9718655)|
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)|
|=||((3019.9071002 + 4168.45198597) / 13287.7997914)||/||((1788.21261361 + 4057.743505) / 11882.4015423)|
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|
|=||(2613.87750045 - 0||-||4039.3883321)||/||13287.7997914|
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 -2.83 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