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GuruFocus has detected 3 Warning Signs with Starbucks Corp $FRA:SRB.
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Starbucks Corp (FRA:SRB)
Beneish M-Score
-2.91 (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.

Starbucks Corp has a M-score of -2.86 suggests that the company is not a manipulator.

FRA:SRB' s Beneish M-Score Range Over the Past 10 Years
Min: -82.07   Max: 7.56
Current: -2.91

-82.07
7.56

During the past 13 years, the highest Beneish M-Score of Starbucks Corp was 7.56. The lowest was -82.07. And the median was -2.75.


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 Starbucks Corp 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 * 0.998+0.528 * 0.9915+0.404 * 0.9511+0.892 * 1.1097+0.115 * 1.0362
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0167+4.679 * -0.0942-0.327 * 1.028
=-2.86

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

This Year (Mar17) TTM:Last Year (Mar16) TTM:
Accounts Receivable was EUR 740 Mil.
Revenue was 4949.97662459 + 5434.54355863 + 5088.83542725 + 4661.80135279 = EUR 20,135 Mil.
Gross Profit was 2947.91958859 + 3258.98189402 + 3080.28156464 + 2828.14168743 = EUR 12,115 Mil.
Total Current Assets was EUR 4,600 Mil.
Total Assets was EUR 13,303 Mil.
Property, Plant and Equipment(Net PPE) was EUR 4,268 Mil.
Depreciation, Depletion and Amortization(DDA) was EUR 963 Mil.
Selling, General & Admin. Expense(SGA) was EUR 7,078 Mil.
Total Current Liabilities was EUR 3,740 Mil.
Long-Term Debt was EUR 3,686 Mil.
Net Income was 610.378681627 + 712.674187127 + 713.623808251 + 671.146315415 = EUR 2,708 Mil.
Non Operating Income was 0 + 0 + 0 + 0 = EUR 0 Mil.
Cash Flow from Operations was 414.492753623 + 1417.85951275 + 1165.64198521 + 962.442150231 = EUR 3,960 Mil.
Accounts Receivable was EUR 668 Mil.
Revenue was 4483.8362069 + 4932.98448545 + 4379.22124209 + 4349.28272298 = EUR 18,145 Mil.
Gross Profit was 2678.60991379 + 2926.00752777 + 2612.67040898 + 2608.30437494 = EUR 10,826 Mil.
Total Current Assets was EUR 3,487 Mil.
Total Assets was EUR 11,242 Mil.
Property, Plant and Equipment(Net PPE) was EUR 3,814 Mil.
Depreciation, Depletion and Amortization(DDA) was EUR 899 Mil.
Selling, General & Admin. Expense(SGA) was EUR 6,274 Mil.
Total Current Liabilities was EUR 3,907 Mil.
Long-Term Debt was EUR 2,198 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)
=(739.597942964 / 20135.1569633) / (667.834051724 / 18145.3246574)
=0.03673167 / 0.03680475
=0.998

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)
=(10825.5922255 / 18145.3246574) / (12115.3247347 / 20135.1569633)
=0.59660504 / 0.60170004
=0.9915

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 - (4599.71949509 + 4267.88218794) / 13303.3193081) / (1 - (3487.33836207 + 3813.66738506) / 11242.2772989)
=0.33342939 / 0.35057591
=0.9511

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
=20135.1569633 / 18145.3246574
=1.1097

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))
=(898.546512088 / (898.546512088 + 3813.66738506)) / (962.557827288 / (962.557827288 + 4267.88218794))
=0.19068458 / 0.18402999
=1.0362

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)
=(7078.18625603 / 20135.1569633) / (6273.65513806 / 18145.3246574)
=0.3515337 / 0.34574499
=1.0167

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)
=((3686.30201029 + 3740.15895278) / 13303.3193081) / ((2197.91666667 + 3907.32758621) / 11242.2772989)
=0.5582412 / 0.54306117
=1.028

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
=(2707.82299242 - 0 - 3960.43640181) / 13303.3193081
=-0.0942

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.

Starbucks Corp 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 local exchange's currency.

Starbucks Corp Annual Data

Sep07Sep08Sep09Sep10Sep11Sep12Sep13Sep14Sep15Sep16
DSRI 1.0611.11950.79081.09751.15641.10631.01121.07990.94760.9395
GMI 0.65950.70650.82320.94791.01331.03190.9850.97880.9820.9886
AQI 1.02641.20491.05541.05450.86581.00661.49211.1541.2311.0014
SGI 1.10680.99111.02361.1321.0521.21291.10141.07971.38071.1382
DEPI 1.05350.91210.86141.05570.95751.0551.03671.01940.91740.9875
SGAI 2.85571.77961.28320.98420.95060.95780.98870.97341.00891.009
LVGI 1.15730.95380.7910.95450.97820.94131.72680.8161.02071.1199
TATA -0.128-0.1732-0.1866-0.1121-0.0539-0.0485-0.25290.1267-0.1006-0.1246
M-score -3.46-3.39-3.59-2.78-2.58-2.37-3.60-1.62-2.59-3.04

Starbucks Corp Quarterly Data

Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16Dec16Mar17
DSRI 1.10821.1391.05210.94760.94610.87570.94410.93951.06220.998
GMI 0.97680.97580.97730.9820.98310.98650.98890.98860.98860.9915
AQI 1.01351.03470.91211.2310.98071.05591.04011.00141.11050.9511
SGI 1.13021.24671.33251.38071.37551.25891.17531.13821.10021.1097
DEPI 1.09731.13521.0070.91740.86340.82940.93060.98751.02721.0362
SGAI 0.98410.99130.99541.00891.00821.00491.01381.0091.01751.0167
LVGI 0.93080.96481.04671.02071.0841.18861.08311.11991.09961.028
TATA -0.1035-0.0992-0.0876-0.1006-0.1101-0.1077-0.1111-0.1246-0.1073-0.0942
M-score -2.72-2.57-2.61-2.59-2.77-2.93-2.92-3.04-2.83-2.86
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