Switch to:
GuruFocus has detected 7 Warning Signs with Yum Brands Inc $YUM.
More than 500,000 people have already joined GuruFocus to track the stocks they follow and exchange investment ideas.
Yum Brands Inc (NYSE:YUM)
Beneish M-Score
-2.22 (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 -2.22 suggests that the company is not a manipulator.

YUM' s Beneish M-Score Range Over the Past 10 Years
Min: -4.83   Max: -1.67
Current: -2.22

-4.83
-1.67

During the past 13 years, the highest Beneish M-Score of Yum Brands Inc was -1.67. The lowest was -4.83. And the median was -2.72.


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 * 0.6791+0.528 * 1.2404+0.404 * 0.6709+0.892 * 1.6815+0.115 * 0.964
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.7522+4.679 * 0.0885-0.327 * 2.5185
=-2.22

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

This Year (Dec16) TTM:Last Year (Dec15) TTM:
Accounts Receivable was $370 Mil.
Revenue was 1886 + 3316 + 3008 + 2619 = $10,829 Mil.
Gross Profit was 816 + 998 + 812 + 839 = $3,465 Mil.
Total Current Assets was $1,482 Mil.
Total Assets was $5,478 Mil.
Property, Plant and Equipment(Net PPE) was $2,160 Mil.
Depreciation, Depletion and Amortization(DDA) was $309 Mil.
Selling, General & Admin. Expense(SGA) was $1,390 Mil.
Total Current Liabilities was $1,369 Mil.
Long-Term Debt was $9,061 Mil.
Net Income was 303 + 622 + 339 + 391 = $1,655 Mil.
Non Operating Income was -34 + 0 + 0 + 0 = $-34 Mil.
Cash Flow from Operations was -338 + 646 + 237 + 659 = $1,204 Mil.
Accounts Receivable was $324 Mil.
Revenue was -2714 + 3427 + 3105 + 2622 = $6,440 Mil.
Gross Profit was 22 + 933 + 810 + 791 = $2,556 Mil.
Total Current Assets was $1,687 Mil.
Total Assets was $8,061 Mil.
Property, Plant and Equipment(Net PPE) was $2,347 Mil.
Depreciation, Depletion and Amortization(DDA) was $322 Mil.
Selling, General & Admin. Expense(SGA) was $1,099 Mil.
Total Current Liabilities was $3,087 Mil.
Long-Term Debt was $3,007 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)
=(370 / 10829) / (324 / 6440)
=0.03416751 / 0.05031056
=0.6791

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)
=(2556 / 6440) / (3465 / 10829)
=0.39689441 / 0.31997414
=1.2404

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 - (1482 + 2160) / 5478) / (1 - (1687 + 2347) / 8061)
=0.33515882 / 0.49956581
=0.6709

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
=10829 / 6440
=1.6815

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))
=(322 / (322 + 2347)) / (309 / (309 + 2160))
=0.12064444 / 0.12515188
=0.964

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)
=(1390 / 10829) / (1099 / 6440)
=0.12835904 / 0.17065217
=0.7522

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)
=((9061 + 1369) / 5478) / ((3007 + 3087) / 8061)
=1.90397955 / 0.75598561
=2.5185

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
=(1655 - -34 - 1204) / 5478
=0.0885

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 -2.22 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

Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15Dec16
DSRI 0.93880.93991.08631.02331.00370.97471.10432.36620.87211.1571
GMI 1.03251.02870.94550.93621.03710.98891.02220.67410.97840.9462
AQI 0.91571.08290.99880.91511.07051.13150.92480.93591.82360.6709
SGI 1.08941.08290.96071.04681.11311.07980.95970.50340.97770.987
DEPI 0.94420.94711.00650.97150.99121.02060.94672.04790.56340.964
SGAI 0.97120.95851.02690.92140.96521.01930.97431.44611.09351.0409
LVGI 1.16321.17630.83950.94850.95610.92151.04911.10431.14842.5185
TATA -0.0909-0.0853-0.0466-0.0974-0.0963-0.0773-0.1205-0.01990.00990.086
M-score -2.95-2.87-2.63-2.91-2.76-2.72-3.02-1.95-2.36-2.61

Yum Brands Inc Quarterly Data

Sep14Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16Dec16
DSRI 1.03972.36622.15662.11341.98350.87211.1291.18861.28520.6791
GMI 0.98390.67410.68660.69460.67010.97840.95640.94440.9251.2404
AQI 0.94550.93590.89410.93070.89331.82361.00971.02080.90680.6709
SGI 1.03090.50340.48860.47050.47980.97770.99260.99280.96441.6815
DEPI 0.97252.04792.0572.0211.98250.56340.9661.00871.01910.964
SGAI 0.92591.44611.52711.56621.54731.09351.04381.05411.12810.7522
LVGI 1.05231.10431.11231.11731.07761.14841.33641.39591.71762.5185
TATA -0.0806-0.0199-0.0179-0.0199-0.0590.0099-0.00410.03230.0660.0885
M-score -2.83-1.95-2.17-2.23-2.54-2.36-2.53-2.32-2.27-2.22
Get WordPress Plugins for easy affiliate links on Stock Tickers and Guru Names | Earn affiliate commissions by embedding GuruFocus Charts
GuruFocus Affiliate Program: Earn up to $400 per referral. ( Learn More)
FEEDBACK