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McDonald's Corp (NYSE:MCD)
Beneish M-Score
-2.86 (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 -2.86 suggests that the company is not a manipulator.

MCD' s Beneish M-Score Range Over the Past 10 Years
Min: -2.95   Max: -2.2
Current: -2.86

-2.95
-2.2

During the past 13 years, the highest Beneish M-Score of McDonald's Corp was -2.20. The lowest was -2.95. And the median was -2.61.


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 * 1.1548+0.528 * 0.9891+0.404 * 0.8518+0.892 * 0.9261+0.115 * 0.9954
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0565+4.679 * -0.0543-0.327 * 1.3812
=-2.86

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

This Year (Dec15) TTM:Last Year (Dec14) TTM:
Accounts Receivable was $1,299 Mil.
Revenue was 6341.3 + 6615.1 + 6497.7 + 5958.9 = $25,413 Mil.
Gross Profit was 2506.5 + 2591.3 + 2490.4 + 2201 = $9,789 Mil.
Total Current Assets was $9,643 Mil.
Total Assets was $37,939 Mil.
Property, Plant and Equipment(Net PPE) was $23,118 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,556 Mil.
Selling, General & Admin. Expense(SGA) was $2,434 Mil.
Total Current Liabilities was $2,950 Mil.
Long-Term Debt was $24,122 Mil.
Net Income was 1206.2 + 1309.2 + 1202.4 + 811.5 = $4,529 Mil.
Non Operating Income was 18.5 + 5.8 + 10.6 + 15.9 = $51 Mil.
Cash Flow from Operations was 1378.7 + 1947.4 + 1513.5 + 1699.5 = $6,539 Mil.
Accounts Receivable was $1,214 Mil.
Revenue was 6572.2 + 6987.1 + 7181.7 + 6700.3 = $27,441 Mil.
Gross Profit was 2474.1 + 2681.2 + 2784.3 + 2516.1 = $10,456 Mil.
Total Current Assets was $4,186 Mil.
Total Assets was $34,227 Mil.
Property, Plant and Equipment(Net PPE) was $24,558 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,645 Mil.
Selling, General & Admin. Expense(SGA) was $2,488 Mil.
Total Current Liabilities was $2,748 Mil.
Long-Term Debt was $14,936 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)
=(1298.7 / 25413) / (1214.4 / 27441.3)
=0.05110377 / 0.04425446
=1.1548

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)
=(2591.3 / 27441.3) / (2506.5 / 25413)
=0.38102058 / 0.38520442
=0.9891

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 - (9643 + 23117.6) / 37938.7) / (1 - (4185.5 + 24557.5) / 34227.4)
=0.13648596 / 0.1602342
=0.8518

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
=25413 / 27441.3
=0.9261

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))
=(1644.5 / (1644.5 + 24557.5)) / (1555.7 / (1555.7 + 23117.6))
=0.06276238 / 0.06305196
=0.9954

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)
=(2434.3 / 25413) / (2487.9 / 27441.3)
=0.09578956 / 0.09066261
=1.0565

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)
=((24122.1 + 2950.4) / 37938.7) / ((14935.7 + 2747.9) / 34227.4)
=0.71358534 / 0.5166504
=1.3812

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
=(4529.3 - 50.8 - 6539.1) / 37938.7
=-0.0543

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 -2.86 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 0.96331.23720.8561.17771.05051.00911.00940.94130.94241.1548
GMI 0.95530.93260.94460.95020.96561.01161.00851.01151.01810.9891
AQI 1.07141.09491.00361.05970.99341.00530.93790.97311.00680.8518
SGI 1.0551.05561.03230.96691.05851.12181.02081.01950.97640.9261
DEPI 0.99321.10470.97191.05260.97770.93721.02570.98090.9240.9954
SGAI 0.99790.95910.9640.98090.98670.91451.00480.9531.06811.0565
LVGI 0.90011.02641.11271.00271.00611.05131.01530.98111.09381.3812
TATA -0.0318-0.0879-0.0647-0.0436-0.043-0.048-0.0414-0.0409-0.0574-0.0543
M-score -2.58-2.61-2.95-2.54-2.61-2.59-2.67-2.70-2.86-2.86

McDonald's Corp Quarterly Data

Dec13Mar14Jun14Sep14Dec14Mar15Jun15Sep15Dec15Mar16
DSRI 0.94130.97940.97660.95450.94240.93780.99041.011.1548
GMI 1.01151.00661.00691.01521.01811.02091.02271.0080.9891
AQI 0.97310.97820.98581.00231.00681.01150.95380.98080.8518
SGI 1.01951.02081.01820.99990.97640.94680.91930.91710.9261
DEPI 0.98090.99731.00840.9490.9240.90550.93530.97440.9954
SGAI 0.9530.95980.97531.02981.06811.07411.07961.07641.0565
LVGI 0.98111.00421.03081.0661.09381.13891.22171.22441.3812
TATA -0.0411-0.049-0.0474-0.0565-0.0577-0.0682-0.0687-0.0695-0.0543
M-score -2.70-2.71-2.71-2.81-2.86-2.96-2.98-2.96-2.86
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