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McDonald's Corp (NYSE:MCD)
Beneish M-Score
-2.80 (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 -2.80 suggests that the company is not a manipulator.

MCD' s Beneish M-Score Range Over the Past 10 Years
Min: -2.98   Max: -2.18
Current: -2.8

-2.98
-2.18

During the past 13 years, the highest Beneish M-Score of McDonald's Corp was -2.18. The lowest was -2.98. And the median was -2.67.


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 * 1.1132+0.528 * 0.9512+0.404 * 1.0475+0.892 * 0.9658+0.115 * 0.9988
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0439+4.679 * -0.0493-0.327 * 1.4633
=-2.80

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

This Year (Jun16) TTM:Last Year (Jun15) TTM:
Accounts Receivable was $1,267 Mil.
Revenue was 6265 + 5903.9 + 6341.3 + 6615.1 = $25,125 Mil.
Gross Profit was 2586 + 2313.5 + 2506.5 + 2591.3 = $9,997 Mil.
Total Current Assets was $5,047 Mil.
Total Assets was $33,147 Mil.
Property, Plant and Equipment(Net PPE) was $22,850 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,544 Mil.
Selling, General & Admin. Expense(SGA) was $2,433 Mil.
Total Current Liabilities was $2,667 Mil.
Long-Term Debt was $26,010 Mil.
Net Income was 1092.9 + 1098.6 + 1206.2 + 1309.2 = $4,707 Mil.
Non Operating Income was 13.2 + 10.6 + 18.5 + 5.8 = $48 Mil.
Cash Flow from Operations was 1248.4 + 1719.1 + 1378.7 + 1947.4 = $6,294 Mil.
Accounts Receivable was $1,179 Mil.
Revenue was 6497.7 + 5958.9 + 6572.2 + 6987.1 = $26,016 Mil.
Gross Profit was 2490.4 + 2201 + 2474.1 + 2681.2 = $9,847 Mil.
Total Current Assets was $5,972 Mil.
Total Assets was $34,948 Mil.
Property, Plant and Equipment(Net PPE) was $23,691 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,599 Mil.
Selling, General & Admin. Expense(SGA) was $2,414 Mil.
Total Current Liabilities was $2,761 Mil.
Long-Term Debt was $17,902 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)
=(1267.1 / 25125.3) / (1178.6 / 26015.9)
=0.05043124 / 0.04530306
=1.1132

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)
=(9846.7 / 26015.9) / (9997.3 / 25125.3)
=0.37848777 / 0.39789774
=0.9512

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 - (5046.6 + 22849.9) / 33146.5) / (1 - (5972.2 + 23691.2) / 34947.9)
=0.15838776 / 0.1512108
=1.0475

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
=25125.3 / 26015.9
=0.9658

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))
=(1599.2 / (1599.2 + 23691.2)) / (1544.4 / (1544.4 + 22849.9))
=0.06323348 / 0.06330987
=0.9988

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)
=(2433.2 / 25125.3) / (2413.5 / 26015.9)
=0.09684262 / 0.09277019
=1.0439

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)
=((26010 + 2667.2) / 33146.5) / ((17901.6 + 2760.8) / 34947.9)
=0.86516525 / 0.59123438
=1.4633

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
=(4706.9 - 48.1 - 6293.6) / 33146.5
=-0.0493

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 -2.80 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

Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15
DSRI 0.92991.19760.8561.17771.05051.00911.00940.94130.94241.1548
GMI 0.9740.95630.94460.95020.96561.01161.00851.01151.01810.9891
AQI 1.07141.09491.00361.05970.99341.00530.93790.97311.00680.8518
SGI 1.0931.09051.03230.96691.05851.12181.02081.01950.97640.9261
DEPI 0.99321.10470.97191.05260.97770.93721.02570.98090.9240.9954
SGAI 0.99150.94550.9640.98090.98670.91451.00480.9531.06811.0565
LVGI 0.90011.02641.11271.00271.00611.05131.01530.98111.09381.3812
TATA -0.0318-0.0879-0.0647-0.043-0.0423-0.0492-0.0422-0.041-0.0576-0.0543
M-score -2.56-2.60-2.95-2.54-2.60-2.59-2.67-2.70-2.86-2.86

McDonald's Corp Quarterly Data

Mar14Jun14Sep14Dec14Mar15Jun15Sep15Dec15Mar16Jun16
DSRI 0.97940.97660.95450.94240.93780.99041.011.15481.12071.1132
GMI 1.00661.00691.01521.01811.02091.02271.0080.98910.97270.9512
AQI 0.97820.98581.00231.00681.01150.95380.98080.85180.96251.0475
SGI 1.02081.01820.99990.97640.94680.91930.91710.92610.94970.9658
DEPI 0.99731.00840.9490.9240.90550.93530.97440.99541.04530.9988
SGAI 0.95980.97531.02981.06811.07411.07961.07641.05651.0441.0439
LVGI 1.00421.03081.0661.09381.13891.22171.22441.38121.46331.4633
TATA -0.049-0.0474-0.0565-0.0577-0.0681-0.0687-0.0694-0.0543-0.0529-0.0493
M-score -2.71-2.71-2.81-2.86-2.96-2.98-2.96-2.86-2.84-2.80
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