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Yum Brands Inc (NYSE:YUM)
Beneish M-Score
-2.86 (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 -2.86 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: -2.86

-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 -2.80.


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 * 1.1866+0.528 * 0.9396+0.404 * 1.0208+0.892 * 0.9944+0.115 * 0.957
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0495+4.679 * -0.0809-0.327 * 1.3959
=-2.86

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

This Year (Jun16) TTM:Last Year (Jun15) TTM:
Accounts Receivable was $413 Mil.
Revenue was 3008 + 2619 + 3951 + 3427 = $13,005 Mil.
Gross Profit was 812 + 839 + 970 + 933 = $3,554 Mil.
Total Current Assets was $1,879 Mil.
Total Assets was $8,184 Mil.
Property, Plant and Equipment(Net PPE) was $4,096 Mil.
Depreciation, Depletion and Amortization(DDA) was $735 Mil.
Selling, General & Admin. Expense(SGA) was $1,507 Mil.
Total Current Liabilities was $2,279 Mil.
Long-Term Debt was $5,324 Mil.
Net Income was 339 + 391 + 275 + 421 = $1,426 Mil.
Non Operating Income was 0 + 0 + 0 + 0 = $0 Mil.
Cash Flow from Operations was 237 + 659 + 322 + 870 = $2,088 Mil.
Accounts Receivable was $350 Mil.
Revenue was 3105 + 2622 + 3997 + 3354 = $13,078 Mil.
Gross Profit was 810 + 791 + 907 + 850 = $3,358 Mil.
Total Current Assets was $1,729 Mil.
Total Assets was $8,294 Mil.
Property, Plant and Equipment(Net PPE) was $4,372 Mil.
Depreciation, Depletion and Amortization(DDA) was $745 Mil.
Selling, General & Admin. Expense(SGA) was $1,444 Mil.
Total Current Liabilities was $2,689 Mil.
Long-Term Debt was $2,831 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)
=(413 / 13005) / (350 / 13078)
=0.03175702 / 0.0267625
=1.1866

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)
=(3358 / 13078) / (3554 / 13005)
=0.25676709 / 0.27327951
=0.9396

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 - (1879 + 4096) / 8184) / (1 - (1729 + 4372) / 8294)
=0.26991691 / 0.26440801
=1.0208

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
=13005 / 13078
=0.9944

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))
=(745 / (745 + 4372)) / (735 / (735 + 4096))
=0.14559312 / 0.15214241
=0.957

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)
=(1507 / 13005) / (1444 / 13078)
=0.11587851 / 0.11041444
=1.0495

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)
=((5324 + 2279) / 8184) / ((2831 + 2689) / 8294)
=0.92900782 / 0.66554136
=1.3959

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
=(1426 - 0 - 2088) / 8184
=-0.0809

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 -2.86 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

Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15
DSRI 0.91150.93880.93781.08871.02331.00370.97471.10431.17371.1146
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 -2.91-2.95-2.87-2.62-2.93-2.76-2.58-3.01-2.92-2.97

Yum Brands Inc Quarterly Data

Mar14Jun14Sep14Dec14Mar15Jun15Sep15Dec15Mar16Jun16
DSRI 0.9730.96961.03971.17371.06131.0320.97421.11461.12711.1866
GMI 1.00210.97970.98391.01141.03321.05021.01590.9680.94840.9396
AQI 0.92770.85650.94550.93590.89410.93070.89330.99361.00971.0208
SGI 0.98871.03131.03091.01490.99280.96350.9770.98690.99430.9944
DEPI 0.94780.96120.9810.98640.99110.98520.96510.93240.94210.957
SGAI 0.94380.9250.92590.99021.03091.04871.04081.0741.0421.0495
LVGI 1.04521.06371.05231.10431.11231.11731.07761.15551.33641.3959
TATA -0.1472-0.1605-0.1011-0.1198-0.1181-0.1202-0.1592-0.1048-0.1168-0.0809
M-score -3.24-3.31-2.93-2.92-3.05-3.10-3.34-2.97-3.06-2.86
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