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McDonald's Corp (NYSE:MCD)
Beneish M-Score
-3.12 (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 -3.12 suggests that the company is not a manipulator.

MCD' s Beneish M-Score Range Over the Past 10 Years
Min: -2.98   Max: -2.12
Current: -3.12

-2.98
-2.12

During the past 13 years, the highest Beneish M-Score of McDonald's Corp was -2.12. The lowest was -2.98. And the median was -2.64.


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 * 1.0135+0.528 * 1.0016+0.404 * 0.9808+0.892 * 0.9139+0.115 * 0.9744
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0546+4.679 * -0.1023-0.327 * 1.2244
=-3.12

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

This Year (Sep15) TTM:Last Year (Sep14) TTM:
Accounts Receivable was $1,136 Mil.
Revenue was 6615.1 + 6497.7 + 5958.9 + 0 = $19,072 Mil.
Gross Profit was 2591.3 + 2490.4 + 2201 + 0 = $7,283 Mil.
Total Current Assets was $4,493 Mil.
Total Assets was $32,960 Mil.
Property, Plant and Equipment(Net PPE) was $23,239 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,574 Mil.
Selling, General & Admin. Expense(SGA) was $1,759 Mil.
Total Current Liabilities was $2,957 Mil.
Long-Term Debt was $17,991 Mil.
Net Income was 1309.2 + 1202.4 + 811.5 + 0 = $3,323 Mil.
Non Operating Income was 5.8 + 10.6 + 15.9 + 0 = $32 Mil.
Cash Flow from Operations was 1947.4 + 1513.5 + 1699.5 + 1503.1 = $6,664 Mil.
Accounts Receivable was $1,227 Mil.
Revenue was 6987.1 + 7181.7 + 6700.3 + 0 = $20,869 Mil.
Gross Profit was 2681.2 + 2784.3 + 2516.1 + 0 = $7,982 Mil.
Total Current Assets was $5,210 Mil.
Total Assets was $36,021 Mil.
Property, Plant and Equipment(Net PPE) was $24,985 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,646 Mil.
Selling, General & Admin. Expense(SGA) was $1,825 Mil.
Total Current Liabilities was $4,180 Mil.
Long-Term Debt was $14,517 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)
=(1136.2 / 19071.7) / (1226.7 / 20869.1)
=0.05957518 / 0.05878069
=1.0135

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)
=(2490.4 / 20869.1) / (2591.3 / 19071.7)
=0.38246019 / 0.38185898
=1.0016

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 - (4492.6 + 23239.4) / 32959.5) / (1 - (5210.4 + 24985.3) / 36020.8)
=0.15860374 / 0.1617149
=0.9808

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
=19071.7 / 20869.1
=0.9139

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))
=(1645.6 / (1645.6 + 24985.3)) / (1573.5 / (1573.5 + 23239.4))
=0.06179288 / 0.06341459
=0.9744

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)
=(1759.2 / 19071.7) / (1825.4 / 20869.1)
=0.09224138 / 0.08746903
=1.0546

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)
=((17990.5 + 2956.5) / 32959.5) / ((14516.9 + 4179.6) / 36020.8)
=0.63553755 / 0.51904733
=1.2244

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
=(3323.1 - 32.3 - 6663.5) / 32959.5
=-0.1023

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 -3.12 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 0.92991.19760.8561.17771.05051.00911.00940.94130.9424
GMI 0.9740.95630.94460.95020.96561.01161.00851.01151.0181
AQI 1.07141.09491.00361.05970.99341.00530.93790.97311.0152
SGI 1.0931.09051.03230.96691.05851.12181.02081.01950.9764
DEPI 0.99321.10470.97191.05260.97770.93721.02570.98090.924
SGAI 0.99150.94550.9640.98090.98670.91451.00480.9531.0681
LVGI 0.90011.02641.11271.00271.00611.05131.01530.98111.0954
TATA -0.0234-0.0879-0.0647-0.043-0.0423-0.048-0.0422-0.0409-0.0573
M-score -2.52-2.60-2.95-2.54-2.60-2.59-2.67-2.70-2.86

McDonald's Corp Quarterly Data

Sep13Dec13Mar14Jun14Sep14Dec14Mar15Jun15Sep15Dec15
DSRI 0.98720.94150.97920.97730.9610.92650.93110.9931.0135
GMI 1.01031.01031.00391.00421.01541.01541.01891.02121.0016
AQI 0.93050.97310.97820.98581.00231.01521.01150.95380.9808
SGI 1.01931.01931.0211.01750.99320.99320.95360.91690.9139
DEPI 0.99390.98090.99731.00840.9490.9240.90550.93530.9744
SGAI 0.9420.9420.95110.97181.04561.04561.05231.05861.0546
LVGI 0.97430.98111.00421.03081.0661.09541.13891.22171.2244
TATA -0.0809-0.0791-0.0873-0.0842-0.0952-0.0892-0.1019-0.0997-0.1023
M-score -2.86-2.88-2.89-2.89-2.99-3.00-3.11-3.12-3.12
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