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McDonald's Corp (NYSE:MCD)
Beneish M-Score
-2.96 (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.

McDonald's Corp has a M-score of -2.96 suggests that the company is not a manipulator.

MCD' s 10-Year Beneish M-Score Range
Min: -2.96   Max: -2.12
Current: -2.96

-2.96
-2.12

During the past 13 years, the highest Beneish M-Score of McDonald's Corp was -2.12. The lowest was -2.96. And the median was -2.63.


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 McDonald's 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 * 0.9378+0.528 * 1.0209+0.404 * 1.0115+0.892 * 0.9468+0.115 * 0.9055
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0741+4.679 * -0.0683-0.327 * 1.1389
=-2.96

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.

This Year (Mar15) TTM:Last Year (Mar14) TTM:
Accounts Receivable was $1,092 Mil.
Revenue was 5958.9 + 6572.2 + 6987.1 + 7181.7 = $26,700 Mil.
Gross Profit was 2201 + 2474.1 + 2681.2 + 2784.3 = $10,141 Mil.
Total Current Assets was $3,593 Mil.
Total Assets was $32,156 Mil.
Property, Plant and Equipment(Net PPE) was $23,302 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,620 Mil.
Selling, General & Admin. Expense(SGA) was $2,450 Mil.
Total Current Liabilities was $2,752 Mil.
Long-Term Debt was $14,292 Mil.
Net Income was 811.5 + 1097.5 + 1068.4 + 1387.1 = $4,365 Mil.
Non Operating Income was 15.9 + 8.5 + -7.6 + 20.4 = $37 Mil.
Cash Flow from Operations was 1699.5 + 1503.1 + 1832.9 + 1487 = $6,523 Mil.
Accounts Receivable was $1,230 Mil.
Revenue was 6700.3 + 7093.2 + 7323.4 + 7083.8 = $28,201 Mil.
Gross Profit was 2516.1 + 2742.8 + 2910.6 + 2765.2 = $10,935 Mil.
Total Current Assets was $4,836 Mil.
Total Assets was $36,369 Mil.
Property, Plant and Equipment(Net PPE) was $25,650 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,604 Mil.
Selling, General & Admin. Expense(SGA) was $2,410 Mil.
Total Current Liabilities was $3,101 Mil.
Long-Term Debt was $13,825 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)
=(1091.8 / 26699.9) / (1229.7 / 28200.7)
=0.04089154 / 0.0436053
=0.9378

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)
=(2474.1 / 28200.7) / (2201 / 26699.9)
=0.38774569 / 0.37979918
=1.0209

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 - (3592.8 + 23301.7) / 32155.6) / (1 - (4836.3 + 25650) / 36369.1)
=0.1636138 / 0.1617527
=1.0115

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
=26699.9 / 28200.7
=0.9468

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))
=(1604.4 / (1604.4 + 25650)) / (1620.2 / (1620.2 + 23301.7))
=0.05886756 / 0.06501109
=0.9055

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)
=(2450.3 / 26699.9) / (2409.5 / 28200.7)
=0.09177188 / 0.08544114
=1.0741

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)
=((14291.8 + 2751.9) / 32155.6) / ((13825.4 + 3101.2) / 36369.1)
=0.53003831 / 0.46541157
=1.1389

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
=(4364.5 - 37.2 - 6522.5) / 32155.6
=-0.0683

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.

McDonald's Corp has a M-score of -2.96 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 own currency.

McDonald's Corp Annual Data

Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14
DSRI 1.03580.92991.19760.8561.17771.05051.00911.00940.94130.9424
GMI 0.98260.9740.95630.94460.95020.96561.01161.00851.01151.0181
AQI 0.91091.07141.09491.00361.05970.99341.00530.93790.97311.0152
SGI 1.02811.0931.09051.03230.96691.05851.12181.02081.01950.9764
DEPI 0.91370.99321.10470.97191.05260.97770.93721.02570.98090.924
SGAI 1.06260.99150.94550.9640.98090.98670.91451.00480.9531.0681
LVGI 1.01920.90011.02641.11271.00271.00611.05131.01530.98111.0954
TATA -0.0549-0.0234-0.0879-0.0647-0.043-0.0423-0.048-0.0422-0.0409-0.0573
M-score -2.75-2.52-2.60-2.95-2.54-2.60-2.59-2.67-2.70-2.86

McDonald's Corp Quarterly Data

Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14Dec14Mar15
DSRI 1.00940.98980.99630.98730.94130.97940.97660.95450.94240.9378
GMI 1.00851.01431.01451.01111.01151.00661.00691.01521.01811.0209
AQI 0.93790.95450.92990.93050.97310.97820.98581.00231.01521.0115
SGI 1.02081.00671.01251.01921.01951.02081.01820.99990.97640.9468
DEPI 1.02570.99170.99580.99390.98090.99731.00840.9490.9240.9055
SGAI 1.00481.00830.98650.9380.9530.95980.97531.02981.06811.0741
LVGI 1.01530.98390.95750.97430.98111.00421.03081.0661.09541.1389
TATA -0.0417-0.0444-0.0437-0.0416-0.041-0.0489-0.0474-0.0566-0.0577-0.0683
M-score -2.67-2.70-2.68-2.67-2.70-2.71-2.71-2.81-2.86-2.96
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