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Yum Brands Inc (NYSE:YUM)
Beneish M-Score
-2.75 (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 -2.75 suggests that the company is not a manipulator.

YUM' s 10-Year Beneish M-Score Range
Min: -4.86   Max: 0.39
Current: -2.75

-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 * 1.0047+0.404 * 0.9455+0.892 * 1.0309+0.115 * 0.9725
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.903+4.679 * -0.0673-0.327 * 1.0523
=-2.75

* 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 + 1048 = $3,620 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 $1,467 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 + 0 = $-122 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 932 + 740 + 769 + 1087 = $3,528 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 $689 Mil.
Selling, General & Admin. Expense(SGA) was $1,576 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)
=0.2701792 / 0.26892504
=1.0047

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))
=(689 / (689 + 4257)) / (749 / (749 + 4480))
=0.13930449 / 0.14323963
=0.9725

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)
=(1467 / 13461) / (1576 / 13058)
=0.1089815 / 0.1206923
=0.903

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 - -122 - 2198) / 9177
=-0.0673

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 -2.75 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 2.04290.96790.94471.03251.0310.94340.90421.02910.99551.0595
AQI 0.97121.0321.05380.91571.08290.99880.91511.07051.13150.9248
SGI 1.07531.03751.02271.08941.08530.95861.04681.11311.07980.9597
DEPI 0.94520.941.05210.94420.94711.00650.97150.99121.02060.9467
SGAI 0.32681.10440.98750.97120.9870.99721.00080.98261.00310.8955
LVGI 0.87161.03481.04861.16321.17630.83950.94850.95610.92151.0491
TATA -0.0932-0.1025-0.087-0.1007-0.0853-0.0466-0.0974-0.0963-0.0773-0.1205
M-score -2.11-2.80-2.96-3.00-2.87-2.63-2.94-2.77-2.72-2.99

Yum Brands Inc Quarterly Data

Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14
DSRI 0.96060.9550.97471.04051.1011.19941.10430.9730.96961.0397
GMI 1.03671.01380.99551.00360.99721.02421.04011.03061.02061.0047
AQI 1.03431.13691.13151.01251.07030.97870.92480.92770.85650.9455
SGI 1.13981.12541.07981.03720.98980.96080.95970.98871.03131.0309
DEPI 0.99191.05631.02061.05490.99390.95360.94670.90950.94410.9725
SGAI 0.96310.95861.00311.01961.04391.04210.9170.90270.8590.903
LVGI 0.95320.92570.92150.97020.96820.99671.04911.04521.06371.0523
TATA -0.0701-0.0745-0.0773-0.0822-0.0768-0.1056-0.1205-0.1251-0.1387-0.0673
M-score -2.67-2.66-2.72-2.77-2.73-2.83-3.00-3.12-3.18-2.75
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