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McDonald's Corp (NYSE:MCD)
Beneish M-Score
-2.81 (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 -2.81 suggests that the company is not a manipulator.

MCD' s 10-Year Beneish M-Score Range
Min: -2.96   Max: -2.12
Current: -2.81

-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 * 0.9545+0.528 * 1.0152+0.404 * 1.0023+0.892 * 0.9999+0.115 * 0.949
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0298+4.679 * -0.0565-0.327 * 1.066
=-2.81

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

This Year (Sep14) TTM:Last Year (Sep13) TTM:
Accounts Receivable was $1,227 Mil.
Revenue was 6987.1 + 7181.7 + 6700.3 + 7093.2 = $27,962 Mil.
Gross Profit was 2681.2 + 2784.3 + 2516.1 + 2742.8 = $10,724 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 $2,453 Mil.
Total Current Liabilities was $4,180 Mil.
Long-Term Debt was $14,517 Mil.
Net Income was 1068.4 + 1387.1 + 1204.8 + 1397 = $5,057 Mil.
Non Operating Income was -7.6 + 20.4 + -20.6 + -1.2 = $-9 Mil.
Cash Flow from Operations was 1832.9 + 1487 + 1907.3 + 1873.5 = $7,101 Mil.
Accounts Receivable was $1,285 Mil.
Revenue was 7323.4 + 7083.8 + 6605.3 + 6952.1 = $27,965 Mil.
Gross Profit was 2910.6 + 2765.2 + 2484.1 + 2728.3 = $10,888 Mil.
Total Current Assets was $4,734 Mil.
Total Assets was $35,551 Mil.
Property, Plant and Equipment(Net PPE) was $25,082 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,563 Mil.
Selling, General & Admin. Expense(SGA) was $2,382 Mil.
Total Current Liabilities was $3,822 Mil.
Long-Term Debt was $13,488 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)
=(1226.7 / 27962.3) / (1285.3 / 27964.6)
=0.04386978 / 0.04596168
=0.9545

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)
=(2784.3 / 27964.6) / (2681.2 / 27962.3)
=0.38935654 / 0.38353068
=1.0152

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 - (5210.4 + 24985.3) / 36020.8) / (1 - (4734.1 + 25081.5) / 35551.3)
=0.1617149 / 0.16133587
=1.0023

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
=27962.3 / 27964.6
=0.9999

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))
=(1562.5 / (1562.5 + 25081.5)) / (1645.6 / (1645.6 + 24985.3))
=0.0586436 / 0.06179288
=0.949

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)
=(2453.2 / 27962.3) / (2382.3 / 27964.6)
=0.08773241 / 0.08518985
=1.0298

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)
=((14516.9 + 4179.6) / 36020.8) / ((13487.8 + 3822.3) / 35551.3)
=0.51904733 / 0.48690484
=1.066

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
=(5057.3 - -9 - 7100.7) / 36020.8
=-0.0565

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 -2.81 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

Dec04Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13
DSRI 0.93561.03580.92991.19760.8561.17771.05051.00911.00940.9413
GMI 1.58180.98260.9740.95630.94460.95020.96561.01161.00851.0115
AQI 0.98550.91091.07141.09491.00361.05970.99341.00530.93790.9731
SGI 1.08481.02811.0931.09051.03230.96691.05851.12181.02081.0195
DEPI 0.99370.91370.99321.10470.97191.05260.97770.93721.02570.9809
SGAI 0.34081.06260.99150.94550.9640.98090.98670.91451.00480.953
LVGI 0.91181.01920.90011.02641.11271.00271.00611.05131.01530.9811
TATA -0.0438-0.0549-0.0234-0.0879-0.0647-0.043-0.0423-0.048-0.0422-0.0409
M-score -2.23-2.75-2.52-2.60-2.95-2.54-2.60-2.59-2.67-2.70

McDonald's Corp Quarterly Data

Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14
DSRI 0.96111.02071.00940.98980.99630.98730.94130.97940.97660.9545
GMI 1.0051.00531.00851.01431.01451.01111.01151.00661.00691.0152
AQI 0.98041.01430.93790.95450.92990.93050.97310.97820.98581.0023
SGI 1.0751.03941.02081.00671.01251.01921.01951.02081.01820.9999
DEPI 0.92380.99941.02570.99170.99580.99390.98090.99731.00840.949
SGAI 0.96090.99961.00481.00830.98650.9380.9530.95980.97531.0298
LVGI 1.07241.0041.01530.98390.95750.97430.98111.00421.03081.066
TATA -0.0454-0.0416-0.0417-0.0444-0.0437-0.0416-0.041-0.0488-0.0473-0.0565
M-score -2.69-2.61-2.67-2.70-2.68-2.67-2.70-2.71-2.71-2.81
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