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Yum Brands Inc (NYSE:YUM)
Beneish M-Score
-2.84 (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 -2.84 suggests that the company is not a manipulator.

YUM' s 10-Year Beneish M-Score Range
Min: -4.86   Max: 0.39
Current: -2.84

-4.86
0.39

During the past 13 years, the highest Beneish M-Score of Yum Brands Inc was 0.39. The lowest was -4.86. And the median was -2.77.


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 * 1.0397+0.528 * 1.0153+0.404 * 0.9455+0.892 * 1.0309+0.115 * 0.981
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.8577+4.679 * -0.0878-0.327 * 1.0523
=-2.84

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

This Year (Sep14) TTM:Last Year (Sep13) TTM:
Accounts Receivable was $373 Mil.
Revenue was 3354 + 3204 + 2724 + 4179 = $13,461 Mil.
Gross Profit was 892 + 840 + 840 + 940 = $3,512 Mil.
Total Current Assets was $2,070 Mil.
Total Assets was $9,177 Mil.
Property, Plant and Equipment(Net PPE) was $4,480 Mil.
Depreciation, Depletion and Amortization(DDA) was $749 Mil.
Selling, General & Admin. Expense(SGA) was $1,359 Mil.
Total Current Liabilities was $2,112 Mil.
Long-Term Debt was $3,315 Mil.
Net Income was 404 + 334 + 399 + 321 = $1,458 Mil.
Non Operating Income was -56 + 0 + -66 + 188 = $66 Mil.
Cash Flow from Operations was 528 + 514 + 570 + 586 = $2,198 Mil.
Accounts Receivable was $348 Mil.
Revenue was 3466 + 2904 + 2535 + 4153 = $13,058 Mil.
Gross Profit was 976 + 706 + 739 + 1038 = $3,459 Mil.
Total Current Assets was $1,830 Mil.
Total Assets was $8,730 Mil.
Property, Plant and Equipment(Net PPE) was $4,257 Mil.
Depreciation, Depletion and Amortization(DDA) was $696 Mil.
Selling, General & Admin. Expense(SGA) was $1,537 Mil.
Total Current Liabilities was $1,989 Mil.
Long-Term Debt was $2,917 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)
=(373 / 13461) / (348 / 13058)
=0.02770968 / 0.02665033
=1.0397

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)
=(840 / 13058) / (892 / 13461)
=0.26489508 / 0.26090186
=1.0153

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 - (2070 + 4480) / 9177) / (1 - (1830 + 4257) / 8730)
=0.28625913 / 0.30274914
=0.9455

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
=13461 / 13058
=1.0309

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))
=(696 / (696 + 4257)) / (749 / (749 + 4480))
=0.1405209 / 0.14323963
=0.981

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)
=(1359 / 13461) / (1537 / 13058)
=0.10095832 / 0.11770562
=0.8577

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)
=((3315 + 2112) / 9177) / ((2917 + 1989) / 8730)
=0.59136973 / 0.56197022
=1.0523

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
=(1458 - 66 - 2198) / 9177
=-0.0878

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 -2.84 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.

Yum Brands Inc Annual Data

Dec04Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13
DSRI 1.05651.18470.91150.93880.93781.08871.02331.00370.97471.1043
GMI 2.04290.96790.94471.03251.0310.90510.94251.02911.03181.0222
AQI 0.97121.0321.05380.91571.08290.99880.91511.07051.12570.9296
SGI 1.07531.03751.02271.08941.08530.95861.04681.11311.07980.9597
DEPI 0.94520.941.05210.94420.94711.00650.97150.99120.99390.9721
SGAI 0.32681.10440.98750.97120.9871.00850.98950.98260.92190.9743
LVGI 0.87161.03481.04861.16321.17630.83950.94850.95610.93771.031
TATA -0.0932-0.1025-0.087-0.1007-0.0853-0.0466-0.0974-0.0963-0.0773-0.1205
M-score -2.11-2.80-2.96-3.00-2.87-2.65-2.92-2.77-2.69-3.01

Yum Brands Inc Quarterly Data

Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14
DSRI 0.96060.9550.97471.04051.1011.19941.10430.9730.96961.0397
GMI 1.03671.02251.01731.03461.03881.03581.05651.02810.99721.0153
AQI 1.03431.13691.12571.01251.07030.97870.92960.92770.85650.9455
SGI 1.13981.12541.07981.03720.98980.96080.95970.98871.03131.0309
DEPI 0.98391.03780.99390.99730.98420.96220.97210.94780.96120.981
SGAI 0.93650.91020.93770.98530.98591.05520.91440.88580.88360.8577
LVGI 0.95320.92570.93770.97020.96820.99671.0311.04521.06371.0523
TATA -0.0701-0.0745-0.0773-0.0765-0.0697-0.0914-0.1279-0.1396-0.153-0.0878
M-score -2.66-2.65-2.70-2.73-2.66-2.76-3.02-3.18-3.26-2.84
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