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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.
During the past 13 years, the highest Beneish M-Score of Sonic Corp was -0.97. The lowest was -8.32. And the median was -3.07.
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 * 1.0806||+||0.528 * 0.9459||+||0.404 * 1.0255||+||0.892 * 1.0822||+||0.115 * 0.9314|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0576||+||4.679 * -0.0999||-||0.327 * 1.1394|
|This Year (Nov15) TTM:||Last Year (Nov14) TTM:|
|Accounts Receivable was $32.9 Mil.|
Revenue was 145.803 + 175.266 + 164.748 + 126.219 = $612.0 Mil.
Gross Profit was 57.585 + 8.505 + 91.123 + 46.587 = $203.8 Mil.
Total Current Assets was $86.7 Mil.
Total Assets was $616.1 Mil.
Property, Plant and Equipment(Net PPE) was $416.7 Mil.
Depreciation, Depletion and Amortization(DDA) was $45.2 Mil.
Selling, General & Admin. Expense(SGA) was $81.5 Mil.
Total Current Liabilities was $79.3 Mil.
Long-Term Debt was $493.1 Mil.
Net Income was 12.458 + 26.296 + 20.442 + 7.662 = $66.9 Mil.
Non Operating Income was 0 + 0 + 0 + 0 = $0.0 Mil.
Cash Flow from Operations was 25.768 + 35.86 + 43.719 + 23.084 = $128.4 Mil.
|Accounts Receivable was $28.2 Mil.
Revenue was 139.856 + 163.769 + 152.187 + 109.741 = $565.6 Mil.
Gross Profit was 53.407 + 4.222 + 82.275 + 38.23 = $178.1 Mil.
Total Current Assets was $90.3 Mil.
Total Assets was $641.6 Mil.
Property, Plant and Equipment(Net PPE) was $436.8 Mil.
Depreciation, Depletion and Amortization(DDA) was $43.8 Mil.
Selling, General & Admin. Expense(SGA) was $71.2 Mil.
Total Current Liabilities was $75.7 Mil.
Long-Term Debt was $447.5 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)|
|=||(32.918 / 612.036)||/||(28.15 / 565.553)|
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)|
|=||(8.505 / 565.553)||/||(57.585 / 612.036)|
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 - (86.706 + 416.65) / 616.117)||/||(1 - (90.344 + 436.768) / 641.617)|
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))|
|=||(43.836 / (43.836 + 436.768))||/||(45.231 / (45.231 + 416.65))|
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)|
|=||(81.488 / 612.036)||/||(71.198 / 565.553)|
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)|
|=||((493.135 + 79.278) / 616.117)||/||((447.509 + 75.679) / 641.617)|
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|
|=||(66.858 - 0||-||128.431)||/||616.117|
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 -2.88 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