Switch to:
McDonald's Corp (NYSE:MCD)
Beneish M-Score
-2.98 (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 -2.98 suggests that the company is not a manipulator.

MCD' s 10-Year Beneish M-Score Range
Min: -2.98   Max: -2.12
Current: -2.98

-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 -2.63.


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 * 0.9904+0.528 * 1.0227+0.404 * 0.9538+0.892 * 0.9193+0.115 * 0.9353
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0796+4.679 * -0.0686-0.327 * 1.2217
=-2.98

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

This Year (Jun15) TTM:Last Year (Jun14) TTM:
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.
Net Income was 1202.4 + 811.5 + 1097.5 + 1068.4 = $4,180 Mil.
Non Operating Income was 10.6 + 15.9 + 8.5 + -7.6 = $27 Mil.
Cash Flow from Operations was 1513.5 + 1699.5 + 1503.1 + 1832.9 = $6,549 Mil.
Accounts Receivable was $1,295 Mil.
Revenue was 7181.7 + 6700.3 + 7093.2 + 7323.4 = $28,299 Mil.
Gross Profit was 2784.3 + 2516.1 + 2742.8 + 2910.6 = $10,954 Mil.
Total Current Assets was $5,914 Mil.
Total Assets was $37,781 Mil.
Property, Plant and Equipment(Net PPE) was $25,877 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,627 Mil.
Selling, General & Admin. Expense(SGA) was $2,432 Mil.
Total Current Liabilities was $3,392 Mil.
Long-Term Debt was $14,891 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)
=(1178.6 / 26015.9) / (1294.5 / 28298.6)
=0.04530306 / 0.04574431
=0.9904

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)
=(2201 / 28298.6) / (2490.4 / 26015.9)
=0.38707922 / 0.37848777
=1.0227

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 - (5972.2 + 23691.2) / 34947.9) / (1 - (5913.7 + 25877.3) / 37780.6)
=0.1512108 / 0.15853639
=0.9538

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
=26015.9 / 28298.6
=0.9193

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))
=(1626.7 / (1626.7 + 25877.3)) / (1599.2 / (1599.2 + 23691.2))
=0.05914412 / 0.06323348
=0.9353

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)
=(2413.5 / 26015.9) / (2431.7 / 28298.6)
=0.09277019 / 0.08593005
=1.0796

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)
=((17901.6 + 2760.8) / 34947.9) / ((14891.4 + 3391.7) / 37780.6)
=0.59123438 / 0.48392826
=1.2217

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
=(4179.8 - 27.4 - 6549) / 34947.9
=-0.0686

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 -2.98 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

Mar13Jun13Sep13Dec13Mar14Jun14Sep14Dec14Mar15Jun15
DSRI 0.98980.99630.98730.94130.97940.97660.95450.94240.93780.9904
GMI 1.01431.01451.01111.01151.00661.00691.01521.01811.02091.0227
AQI 0.95450.92990.93050.97310.97820.98581.00231.01521.01150.9538
SGI 1.00671.01251.01921.01951.02081.01820.99990.97640.94680.9193
DEPI 0.99170.99580.99390.98090.99731.00840.9490.9240.90550.9353
SGAI 1.00830.98650.9380.9530.95980.97531.02981.06811.07411.0796
LVGI 0.98390.95750.97430.98111.00421.03081.0661.09541.13891.2217
TATA -0.0444-0.0437-0.0416-0.041-0.0489-0.0472-0.0564-0.0574-0.068-0.0686
M-score -2.70-2.68-2.67-2.70-2.71-2.71-2.81-2.86-2.96-2.98
Get WordPress Plugins for easy affiliate links on Stock Tickers and Guru Names | Earn affiliate commissions by embedding GuruFocus Charts
GuruFocus Affiliate Program: Earn up to $400 per referral. ( Learn More)

GuruFocus Premium Plus Membership

FEEDBACK