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Yum Brands Inc (NYSE:YUM)
Beneish M-Score
-2.69 (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.

Yum Brands Inc has a M-score of -2.69 suggests that the company is not a manipulator.

YUM' s Beneish M-Score Range Over the Past 10 Years
Min: -4.83   Max: -1.16
Current: -2.69

-4.83
-1.16

During the past 13 years, the highest Beneish M-Score of Yum Brands Inc was -1.16. The lowest was -4.83. And the median was -2.79.


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 Yum Brands Inc 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 * 1.2641+0.528 * 0.9322+0.404 * 0.9068+0.892 * 0.9805+0.115 * 0.9626
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0952+4.679 * -0.0227-0.327 * 1.7176
=-2.69

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

This Year (Sep16) TTM:Last Year (Sep15) TTM:
Accounts Receivable was $440 Mil.
Revenue was 3316 + 3008 + 2619 + 3951 = $12,894 Mil.
Gross Profit was 998 + 812 + 839 + 970 = $3,619 Mil.
Total Current Assets was $4,003 Mil.
Total Assets was $10,432 Mil.
Property, Plant and Equipment(Net PPE) was $4,010 Mil.
Depreciation, Depletion and Amortization(DDA) was $731 Mil.
Selling, General & Admin. Expense(SGA) was $1,556 Mil.
Total Current Liabilities was $2,299 Mil.
Long-Term Debt was $9,119 Mil.
Net Income was 622 + 339 + 391 + 275 = $1,627 Mil.
Non Operating Income was 0 + 0 + 0 + 0 = $0 Mil.
Cash Flow from Operations was 646 + 237 + 659 + 322 = $1,864 Mil.
Accounts Receivable was $355 Mil.
Revenue was 3427 + 3105 + 2622 + 3997 = $13,151 Mil.
Gross Profit was 933 + 810 + 791 + 907 = $3,441 Mil.
Total Current Assets was $1,919 Mil.
Total Assets was $8,306 Mil.
Property, Plant and Equipment(Net PPE) was $4,263 Mil.
Depreciation, Depletion and Amortization(DDA) was $743 Mil.
Selling, General & Admin. Expense(SGA) was $1,449 Mil.
Total Current Liabilities was $2,642 Mil.
Long-Term Debt was $2,651 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)
=(440 / 12894) / (355 / 13151)
=0.0341244 / 0.02699414
=1.2641

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)
=(3441 / 13151) / (3619 / 12894)
=0.26165311 / 0.28067318
=0.9322

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 - (4003 + 4010) / 10432) / (1 - (1919 + 4263) / 8306)
=0.23188267 / 0.25571876
=0.9068

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
=12894 / 13151
=0.9805

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))
=(743 / (743 + 4263)) / (731 / (731 + 4010))
=0.14842189 / 0.15418688
=0.9626

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)
=(1556 / 12894) / (1449 / 13151)
=0.12067628 / 0.11018174
=1.0952

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)
=((9119 + 2299) / 10432) / ((2651 + 2642) / 8306)
=1.09451687 / 0.63725018
=1.7176

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
=(1627 - 0 - 1864) / 10432
=-0.0227

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.

Yum Brands Inc has a M-score of -2.69 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 local exchange's currency.

Yum Brands Inc Annual Data

Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15
DSRI 0.91150.93880.93781.08871.02331.00370.97471.10431.17371.0479
GMI 0.94471.03251.0310.94340.93621.03710.98891.02221.01140.968
AQI 1.05380.91571.08290.99880.91511.07051.12570.92960.93590.9936
SGI 1.02271.08941.08530.95861.04681.11311.07980.95971.01490.9869
DEPI 1.05210.94420.94711.00650.97150.97911.00620.97210.98640.9324
SGAI 0.98750.97120.9870.91970.99910.96521.01930.97430.99021.074
LVGI 1.04861.16321.17630.83950.94850.95610.93771.0311.10431.1555
TATA -0.0751-0.0909-0.0853-0.0466-0.0974-0.0963-0.0443-0.1205-0.1198-0.1048
M-score -2.91-2.95-2.87-2.62-2.93-2.76-2.58-3.01-2.92-3.03

Yum Brands Inc Quarterly Data

Jun14Sep14Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16
DSRI 0.96961.03971.17371.06131.0320.97421.04791.12711.18661.2641
GMI 0.97970.98391.01141.03321.05021.01590.9680.94840.93960.9322
AQI 0.85650.94550.93590.89410.93070.89330.99361.00971.02080.9068
SGI 1.03131.03091.01490.99280.96350.9770.98690.99430.99440.9805
DEPI 0.96120.9810.98640.99110.98520.96510.93240.94210.9570.9626
SGAI 0.9250.92590.99021.03091.04871.04081.0741.0421.04951.0952
LVGI 1.06371.05231.10431.11231.11731.07761.15551.33641.39591.7176
TATA -0.1605-0.1011-0.1198-0.1181-0.1202-0.1592-0.1048-0.1168-0.0809-0.0227
M-score -3.31-2.93-2.92-3.05-3.10-3.34-3.03-3.06-2.86-2.69
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