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GuruFocus has detected 2 Warning Signs with Starbucks Corp $FRA:SRB.
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Starbucks Corp (FRA:SRB)
Beneish M-Score
-2.88 (As of Today)

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.

Starbucks Corp has a M-score of -2.83 suggests that the company is not a manipulator.

FRA:SRB' s Beneish M-Score Range Over the Past 10 Years
Min: -10.99   Max: -1.57
Current: -2.88

-10.99
-1.57

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.


Definition

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
=-2.83

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

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

Measured as the ratio of days’ sales in receivables in year t to year t-1.

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)
=0.04169389 / 0.03925138
=1.0622

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.

GMI=GrossMargin_t-1 / GrossMargin_t
=(GrossProfit_t-1 / Revenue_t-1) / (GrossProfit_t / Revenue_t)
=(10645.0881973 / 17877.9718655) / (11846.0150599 / 19669.0165456)
=0.59543041 / 0.60226779
=0.9886

3. AQI = Asset Quality Index

AQI is the ratio of asset quality in year t to year t-1.

Asset quality is measured as the ratio of non-current assets other than plant, property and equipment to total assets.

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)
=0.35118033 / 0.31624367
=1.1105

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.

SGI=Sales_t / Sales_t-1
=Revenue_t / Revenue_t-1
=19669.0165456 / 17877.9718655
=1.1002

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))
=0.18758513 / 0.18262588
=1.0272

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)
=0.35095341 / 0.34492579
=1.0175

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)
=0.54097437 / 0.49198439
=1.0996

8. TATA = Total Accruals to Total Assets

Total accruals calculated as the change in working capital accounts other than cash less depreciation.

TATA=(IncomefromContinuingOperations_t - CashFlowsfromOperations_t) / TotalAssets_t
=(NetIncome_t - NonOperatingIncome_t - CashFlowsfromOperations_t) / TotalAssets_t
=(2613.87750045 - 0 - 4039.3883321) / 13287.7997914
=-0.1073

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.


Related Terms

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


Historical Data

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

Starbucks Corp Annual Data

Sep07Sep08Sep09Sep10Sep11Sep12Sep13Sep14Sep15Sep16
DSRI 1.06211.03740.87371.01971.16851.10791.03181.01590.9780.9613
GMI 0.91360.42230.99120.9491.01321.03160.9850.97890.98210.9882
AQI 1.02641.20491.05541.05450.86581.00661.49211.1541.2311.0014
SGI 1.10561.06950.92661.21841.04121.21121.07941.14771.33781.1124
DEPI 1.0550.85670.93410.99380.96591.05641.05420.96940.94321.0043
SGAI 1.37034.8610.98060.98310.95190.95740.98860.9741.00751.0102
LVGI 1.15730.95380.7910.95450.97820.94131.72680.8161.02071.1199
TATA -0.1232-0.1663-0.179-0.1268-0.0498-0.0446-0.25180.1358-0.1064-0.1226
M-score -3.05-4.05-3.42-2.85-2.56-2.35-3.60-1.59-2.63-3.04

Starbucks Corp Quarterly Data

Sep14Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16Dec16
DSRI 1.07991.10821.1391.05210.94760.94610.87570.94410.93951.0622
GMI 0.97880.97680.97580.97730.9820.98310.98650.98890.98860.9886
AQI 1.1541.01351.03470.91211.2310.98071.05591.04011.00141.1105
SGI 1.07971.13021.24671.33251.38071.37551.25891.17531.13821.1002
DEPI 1.01941.09731.13521.0070.91740.86340.82940.93060.98751.0272
SGAI 0.97340.98410.99130.99541.00891.00821.00491.01381.0091.0175
LVGI 0.8160.93080.96481.04671.02071.0841.18861.08311.11991.0996
TATA 0.1267-0.1035-0.0992-0.0876-0.1006-0.1101-0.1077-0.1111-0.1246-0.1073
M-score -1.62-2.72-2.57-2.61-2.59-2.77-2.93-2.92-3.04-2.83
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