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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.
Amazon.com Inc has a M-score of -2.82 suggests that the company is not a manipulator.
During the past 13 years, the highest Beneish M-Score of Amazon.com Inc was -0.01. The lowest was -4.36. And the median was -2.70.
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 Amazon.com 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 * 1.1769||+||0.528 * 0.9291||+||0.404 * 1.0679||+||0.892 * 1.2155||+||0.115 * 1.0555|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0876||+||4.679 * -0.1452||-||0.327 * 0.984|
|This Year (Sep14) TTM:||Last Year (Sep13) TTM:|
|Accounts Receivable was $4,373 Mil.|
Revenue was 20579 + 19340 + 19741 + 25587 = $85,247 Mil.
Gross Profit was 5952 + 5941 + 5686 + 6781 = $24,360 Mil.
Total Current Assets was $18,572 Mil.
Total Assets was $40,419 Mil.
Property, Plant and Equipment(Net PPE) was $15,702 Mil.
Depreciation, Depletion and Amortization(DDA) was $4,328 Mil.
Selling, General & Admin. Expense(SGA) was $15,627 Mil.
Total Current Liabilities was $20,842 Mil.
Long-Term Debt was $3,099 Mil.
Net Income was -437 + -126 + 108 + 240 = $-215 Mil.
Non Operating Income was -50 + 22 + 5 + -29 = $-52 Mil.
Cash Flow from Operations was 1766 + 862 + -2502 + 5578 = $5,704 Mil.
|Accounts Receivable was $3,057 Mil.
Revenue was 17092 + 15704 + 16070 + 21268 = $70,134 Mil.
Gross Profit was 4726 + 4495 + 4269 + 5131 = $18,621 Mil.
Total Current Assets was $17,334 Mil.
Total Assets was $31,861 Mil.
Property, Plant and Equipment(Net PPE) was $9,991 Mil.
Depreciation, Depletion and Amortization(DDA) was $2,952 Mil.
Selling, General & Admin. Expense(SGA) was $11,821 Mil.
Total Current Liabilities was $16,135 Mil.
Long-Term Debt was $3,043 Mil.
1. DSRI = Days Sales in Receivables Index
A large increase in DSR could be indicative of revenue inflation.
|DSRI||=||(Receivables_t / Revenue_t)||/||(Receivables_t-1 / Revenue_t-1)|
|=||(4373 / 85247)||/||(3057 / 70134)|
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.
|=||(GrossProfit_t-1 / Revenue_t-1)||/||(GrossProfit_t / Revenue_t)|
|=||(5941 / 70134)||/||(5952 / 85247)|
3. AQI = Asset Quality Index
AQI is the ratio of asset quality in year t to year t-1.
|AQI||=||(1 - (CurrentAssets_t + PPE_t) / TotalAssets_t)||/||(1 - (CurrentAssets_t-1 + PPE_t-1) / TotalAssets_t-1)|
|=||(1 - (18572 + 15702) / 40419)||/||(1 - (17334 + 9991) / 31861)|
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.
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))|
|=||(2952 / (2952 + 9991))||/||(4328 / (4328 + 15702))|
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)|
|=||(15627 / 85247)||/||(11821 / 70134)|
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)|
|=||((3099 + 20842) / 40419)||/||((3043 + 16135) / 31861)|
8. TATA = Total Accruals to Total Assets
Total accruals calculated as the change in working capital accounts other than cash less depreciation.
|=||(NetIncome_t - NonOperatingIncome_t||-||CashFlowsfromOperations_t)||/||TotalAssets_t|
|=||(-215 - -52||-||5704)||/||40419|
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.
Amazon.com Inc has a M-score of -2.82 suggests that the company will not be a manipulator.
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
Amazon.com Inc Annual Data
Amazon.com Inc Quarterly Data