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Sonic Corporation (NAS:SONC)
Beneish M-Score
-3.05 (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.

Sonic Corporation has a M-score of -3.16 suggests that the company is not a manipulator.

SONC' s 10-Year Beneish M-Score Range
Min: -8.32   Max: -0.97
Current: -3.05

-8.32
-0.97

During the past 13 years, the highest Beneish M-Score of Sonic Corporation was -0.97. The lowest was -8.32. And the median was -3.10.


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 Sonic Corporation 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 * 1.0449+0.528 * 0.9902+0.404 * 0.8926+0.892 * 1.008+0.115 * 1.0828
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0232+4.679 * -0.1479-0.327 * 0.9914
=-3.16

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

This Year (Feb14) TTM:Last Year (Feb13) TTM:
Accounts Receivable was $32.7 Mil.
Revenue was 109.741 + 126.652 + 158.802 + 146.634 = $541.8 Mil.
Gross Profit was 38.23 + 45.269 + 61.527 + 56.578 = $201.6 Mil.
Total Current Assets was $87.8 Mil.
Total Assets was $618.6 Mil.
Property, Plant and Equipment(Net PPE) was $415.3 Mil.
Depreciation, Depletion and Amortization(DDA) was $39.8 Mil.
Selling, General & Admin. Expense(SGA) was $67.3 Mil.
Total Current Liabilities was $61.1 Mil.
Long-Term Debt was $457.5 Mil.
Net Income was 4.107 + 8.208 + 12.198 + 14.793 = $39.3 Mil.
Non Operating Income was 0 + 0 + 28.998 + 0 = $29.0 Mil.
Cash Flow from Operations was 7.857 + 28.063 + 31.989 + 33.903 = $101.8 Mil.
Accounts Receivable was $31.0 Mil.
Revenue was 111.141 + 126.008 + 150.94 + 149.427 = $537.5 Mil.
Gross Profit was 37.336 + 43.935 + 58.743 + 58.027 = $198.0 Mil.
Total Current Assets was $96.1 Mil.
Total Assets was $624.7 Mil.
Property, Plant and Equipment(Net PPE) was $397.9 Mil.
Depreciation, Depletion and Amortization(DDA) was $41.6 Mil.
Selling, General & Admin. Expense(SGA) was $65.3 Mil.
Total Current Liabilities was $63.5 Mil.
Long-Term Debt was $464.7 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)
=(32.681 / 541.829) / (31.029 / 537.516)
=0.06031608 / 0.05772665
=1.0449

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)
=(45.269 / 537.516) / (38.23 / 541.829)
=0.3684374 / 0.37208049
=0.9902

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 - (87.784 + 415.334) / 618.623) / (1 - (96.108 + 397.883) / 624.663)
=0.18671307 / 0.20918799
=0.8926

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
=541.829 / 537.516
=1.008

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))
=(41.602 / (41.602 + 397.883)) / (39.788 / (39.788 + 415.334))
=0.0946608 / 0.08742271
=1.0828

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)
=(67.316 / 541.829) / (65.269 / 537.516)
=0.12423846 / 0.12142708
=1.0232

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)
=((457.505 + 61.105) / 618.623) / ((464.748 + 63.482) / 624.663)
=0.83832965 / 0.84562396
=0.9914

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
=(39.306 - 28.998 - 101.812) / 618.623
=-0.1479

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 Corporation has a M-score of -3.16 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.

Sonic Corporation Annual Data

Aug04Aug05Aug06Aug07Aug08Aug09Aug10Aug11Aug12Aug13
DSRI 0.88630.8951.01680.97651.23761.05331.18341.47960.72811.3647
GMI 0.60981.01321.89320.90141.12720.9330.95941.02520.96270.9823
AQI 0.9780.89940.99381.09940.88250.80411.06871.15391.07410.9498
SGI 1.20111.16151.11271.11141.04440.87770.780.9910.99590.9979
DEPI 0.96780.9830.88710.92261.07120.94651.04880.98360.94240.9418
SGAI 4.09291.02330.2261.01540.99731.17991.35260.98041.00761.0152
LVGI 0.7540.87471.28663.08410.93530.90860.97990.92880.98330.9554
TATA -0.0913-0.1091-0.076-0.0654-0.0799-0.0642-0.0761-0.0616-0.1322-0.1205
M-score -3.50-2.94-2.22-3.41-2.55-2.96-2.91-2.23-3.34-2.73

Sonic Corporation Quarterly Data

Nov11Feb12May12Aug12Nov12Feb13May13Aug13Nov13Feb14
DSRI 1.4311.47211.02770.72810.74220.82790.97541.36471.11131.0449
GMI 1.02321.00670.99790.96270.94540.94130.95770.98230.98790.9902
AQI 1.19321.08871.04161.07411.1231.14841.09440.94980.88270.8926
SGI 1.00271.00530.98930.99590.99330.98330.9830.99791.00331.008
DEPI 0.9760.96030.94340.94240.86650.89190.92140.94181.04491.0828
SGAI 0.95380.99361.00371.00761.03511.02311.02741.01521.0121.0232
LVGI 0.94490.95670.9490.98330.98930.99010.96710.95540.92780.9914
TATA -0.0525-0.0625-0.0989-0.1322-0.1336-0.1298-0.1222-0.1205-0.1384-0.1479
M-score -2.21-2.28-2.90-3.34-3.35-3.24-3.08-2.73-3.05-3.16
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