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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.
Sonic Corp has a M-score of -2.82 suggests that the company is not a manipulator.
During the past 13 years, the highest Beneish M-Score of Sonic Corp was -0.97. The lowest was -4.52. And the median was -3.04.
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 Sonic 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 * 1.0886||+||0.528 * 0.9654||+||0.404 * 0.9551||+||0.892 * 1.018||+||0.115 * 1.0528|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0328||+||4.679 * -0.0855||-||0.327 * 1.01|
|This Year (Aug14) TTM:||Last Year (Aug13) TTM:|
|Accounts Receivable was $18.3 Mil.|
Revenue was 163.769 + 152.187 + 109.741 + 126.652 = $552.3 Mil.
Gross Profit was 66.271 + 60.47 + 38.23 + 45.269 = $210.2 Mil.
Total Current Assets was $95.7 Mil.
Total Assets was $651.0 Mil.
Property, Plant and Equipment(Net PPE) was $442.0 Mil.
Depreciation, Depletion and Amortization(DDA) was $42.2 Mil.
Selling, General & Admin. Expense(SGA) was $69.4 Mil.
Total Current Liabilities was $79.5 Mil.
Long-Term Debt was $450.6 Mil.
Net Income was 18.825 + 16.776 + 4.107 + 8.208 = $47.9 Mil.
Non Operating Income was 0 + 0 + 0 + 0 = $0.0 Mil.
Cash Flow from Operations was 32.49 + 35.138 + 7.857 + 28.063 = $103.5 Mil.
|Accounts Receivable was $16.5 Mil.
Revenue was 158.802 + 146.634 + 111.141 + 126.008 = $542.6 Mil.
Gross Profit was 61.527 + 56.578 + 37.336 + 43.935 = $199.4 Mil.
Total Current Assets was $140.7 Mil.
Total Assets was $660.8 Mil.
Property, Plant and Equipment(Net PPE) was $399.7 Mil.
Depreciation, Depletion and Amortization(DDA) was $40.4 Mil.
Selling, General & Admin. Expense(SGA) was $66.0 Mil.
Total Current Liabilities was $72.9 Mil.
Long-Term Debt was $459.8 Mil.
1. DSRI = Days Sales in Receivables Index
A large increase in DSR could be indicative of revenue inflation.
|DSRI||=||(Receivables_t / Revenue_t)||/||(Receivables_t-1 / Revenue_t-1)|
|=||(18.292 / 552.349)||/||(16.506 / 542.585)|
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.
|=||(GrossProfit_t-1 / Revenue_t-1)||/||(GrossProfit_t / Revenue_t)|
|=||(60.47 / 542.585)||/||(66.271 / 552.349)|
3. AQI = Asset Quality Index
AQI is the ratio of asset quality in year t to year t-1.
|AQI||=||(1 - (CurrentAssets_t + PPE_t) / TotalAssets_t)||/||(1 - (CurrentAssets_t-1 + PPE_t-1) / TotalAssets_t-1)|
|=||(1 - (95.712 + 441.969) / 650.972)||/||(1 - (140.722 + 399.661) / 660.794)|
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.
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))|
|=||(40.387 / (40.387 + 399.661))||/||(42.21 / (42.21 + 441.969))|
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)|
|=||(69.415 / 552.349)||/||(66.022 / 542.585)|
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)|
|=||((450.577 + 79.511) / 650.972)||/||((459.838 + 72.93) / 660.794)|
8. TATA = Total Accruals to Total Assets
Total accruals calculated as the change in working capital accounts other than cash less depreciation.
|=||(NetIncome_t - NonOperatingIncome_t||-||CashFlowsfromOperations_t)||/||TotalAssets_t|
|=||(47.916 - 0||-||103.548)||/||650.972|
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.
Sonic Corp has a M-score of -2.82 suggests that the company will not be a manipulator.
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
Sonic Corp Annual Data
Sonic Corp Quarterly Data