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Yum Brands Inc (NYSE:YUM)
Beneish M-Score
-3.19 (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 -3.19 suggests that the company is not a manipulator.

YUM' s Beneish M-Score Range Over the Past 10 Years
Min: -3.59   Max: -1.25
Current: -3.19

-3.59
-1.25

During the past 13 years, the highest Beneish M-Score of Yum Brands Inc was -1.25. The lowest was -3.59. And the median was -2.95.


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 * 0.9742+0.528 * 1.0159+0.404 * 0.8933+0.892 * 0.977+0.115 * 0.9651
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0408+4.679 * -0.1279-0.327 * 1.0776
=-3.19

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

This Year (Sep15) TTM:Last Year (Sep14) TTM:
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.
Net Income was 421 + 235 + 362 + -86 = $932 Mil.
Non Operating Income was 0 + 0 + 0 + -260 = $-260 Mil.
Cash Flow from Operations was 870 + 431 + 516 + 437 = $2,254 Mil.
Accounts Receivable was $373 Mil.
Revenue was 3354 + 3204 + 2724 + 4179 = $13,461 Mil.
Gross Profit was 850 + 840 + 840 + 1048 = $3,578 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 $1,425 Mil.
Total Current Liabilities was $2,112 Mil.
Long-Term Debt was $3,315 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)
=(355 / 13151) / (373 / 13461)
=0.02699414 / 0.02770968
=0.9742

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)
=(810 / 13461) / (933 / 13151)
=0.26580492 / 0.26165311
=1.0159

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 - (1919 + 4263) / 8306) / (1 - (2070 + 4480) / 9177)
=0.25571876 / 0.28625913
=0.8933

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
=13151 / 13461
=0.977

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))
=(749 / (749 + 4480)) / (743 / (743 + 4263))
=0.14323963 / 0.14842189
=0.9651

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)
=(1449 / 13151) / (1425 / 13461)
=0.11018174 / 0.10586138
=1.0408

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)
=((2651 + 2642) / 8306) / ((3315 + 2112) / 9177)
=0.63725018 / 0.59136973
=1.0776

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
=(932 - -260 - 2254) / 8306
=-0.1279

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 -3.19 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 0.91150.93880.93781.08871.02331.00370.97471.10431.00381.1754
GMI 0.94471.03251.0310.94340.93621.03710.98891.02221.01140.968
AQI 1.05380.91571.08290.99880.91511.07051.12570.92960.90111.032
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 1.04861.16321.17630.83950.94850.95610.93771.0311.10331.1566
TATA -0.087-0.1007-0.0853-0.0466-0.0974-0.0963-0.0443-0.0637-0.0884-0.1048
M-score -2.96-3.00-2.87-2.62-2.93-2.76-2.58-2.74-2.94-2.90

Yum Brands Inc Quarterly Data

Sep13Dec13Mar14Jun14Sep14Dec14Mar15Jun15Sep15Dec15
DSRI 1.19941.10430.9730.96961.03971.00381.06131.0320.97421.1754
GMI 1.0231.02221.00210.97970.98391.01141.03321.05021.01590.968
AQI 0.97870.92960.92770.85650.94550.90110.89410.93070.89331.032
SGI 0.96080.95970.98871.03131.03091.01490.99280.96350.9770.9869
DEPI 0.97380.97210.94780.96120.9810.98640.99110.98520.96510.9324
SGAI 1.07240.97430.94380.9250.92590.99021.03091.04871.04081.074
LVGI 0.99671.0311.04521.06371.05231.10331.11231.11731.07761.1566
TATA -0.0573-0.0711-0.0904-0.1044-0.0473-0.0884-0.0868-0.0889-0.1279-0.1048
M-score -2.61-2.78-2.98-3.05-2.67-2.94-2.90-2.95-3.19-2.90
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