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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 * 1.1393||+||0.528 * 0.9758||+||0.404 * 1.0347||+||0.892 * 1.2467||+||0.115 * 1.1355|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9913||+||4.679 * -0.0992||-||0.327 * 0.9648|
|This Year (Mar15) TTM:||Last Year (Mar14) TTM:|
|Accounts Receivable was €606 Mil.|
Revenue was 4217.65249538 + 3895.53933496 + 3243.36695112 + 3056.43855776 = €14,413 Mil.
Gross Profit was 2498.79852126 + 2280.61638281 + 1906.59425912 + 1797.05665931 = €8,483 Mil.
Total Current Assets was €3,924 Mil.
Total Assets was €11,267 Mil.
Property, Plant and Equipment(Net PPE) was €3,602 Mil.
Depreciation, Depletion and Amortization(DDA) was €677 Mil.
Selling, General & Admin. Expense(SGA) was €4,959 Mil.
Total Current Liabilities was €3,254 Mil.
Long-Term Debt was €1,893 Mil.
Net Income was 457.393715342 + 797.323600973 + 456.012412723 + 377.189109639 = €2,088 Mil.
Non Operating Income was 0 + 316.788321168 + 0 + 0 = €317 Mil.
Cash Flow from Operations was 532.070240296 + 1155.87996756 + 575.01939488 + 625.5334805 = €2,889 Mil.
|Accounts Receivable was €427 Mil.
Revenue was 2801.01229212 + 3090.08746356 + 2837.97752809 + 2831.91811979 = €11,561 Mil.
Gross Profit was 1622.99349241 + 1781.70553936 + 1614.23220974 + 1620.6974981 = €6,640 Mil.
Total Current Assets was €2,588 Mil.
Total Assets was €7,301 Mil.
Property, Plant and Equipment(Net PPE) was €2,370 Mil.
Depreciation, Depletion and Amortization(DDA) was €519 Mil.
Selling, General & Admin. Expense(SGA) was €4,013 Mil.
Total Current Liabilities was €1,977 Mil.
Long-Term Debt was €1,481 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)|
|=||(605.914972274 / 14412.9973392)||/||(426.608821403 / 11560.9954036)|
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)|
|=||(2280.61638281 / 11560.9954036)||/||(2498.79852126 / 14412.9973392)|
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 - (3923.65988909 + 3602.31053604) / 11266.8207024)||/||(1 - (2587.85249458 + 2370.28199566) / 7300.79537238)|
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))|
|=||(518.658358594 / (518.658358594 + 2370.28199566))||/||(676.530357328 / (676.530357328 + 3602.31053604))|
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)|
|=||(4958.7729651 / 14412.9973392)||/||(4012.59930266 / 11560.9954036)|
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)|
|=||((1893.25323475 + 3254.34380776) / 11266.8207024)||/||((1480.83875633 + 1976.50036153) / 7300.79537238)|
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|
|=||(2087.91883868 - 316.788321168||-||2888.50308323)||/||11266.8207024|
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 -2.57 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