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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.
During the past 13 years, the highest Beneish M-Score of eBay Inc was -1.72. The lowest was -3.58. And the median was -2.64.
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 eBay 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 * 1.2232||+||0.528 * 0.9283||+||0.404 * 1.2502||+||0.892 * 0.6966||+||0.115 * 0.9497|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.122||+||4.679 * -0.1121||-||0.327 * 1.0436|
|This Year (Mar16) TTM:||Last Year (Mar15) TTM:|
|Accounts Receivable was $599 Mil.|
Revenue was 2137 + 2322 + 2099 + 4379 = $10,937 Mil.
Gross Profit was 1660 + 1829 + 1666 + 3031 = $8,186 Mil.
Total Current Assets was $9,703 Mil.
Total Assets was $19,608 Mil.
Property, Plant and Equipment(Net PPE) was $1,497 Mil.
Depreciation, Depletion and Amortization(DDA) was $694 Mil.
Selling, General & Admin. Expense(SGA) was $3,893 Mil.
Total Current Liabilities was $2,107 Mil.
Long-Term Debt was $9,030 Mil.
Net Income was 482 + 477 + 539 + 83 = $1,581 Mil.
Non Operating Income was 0 + 256 + 0 + 0 = $256 Mil.
Cash Flow from Operations was 641 + 1040 + 686 + 1156 = $3,523 Mil.
|Accounts Receivable was $703 Mil.
Revenue was 2061 + 4921 + 4353 + 4366 = $15,701 Mil.
Gross Profit was 1650 + 3321 + 2964 + 2974 = $10,909 Mil.
Total Current Assets was $26,514 Mil.
Total Assets was $44,841 Mil.
Property, Plant and Equipment(Net PPE) was $2,947 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,268 Mil.
Selling, General & Admin. Expense(SGA) was $4,981 Mil.
Total Current Liabilities was $17,611 Mil.
Long-Term Debt was $6,795 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)|
|=||(599 / 10937)||/||(703 / 15701)|
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)|
|=||(1829 / 15701)||/||(1660 / 10937)|
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 - (9703 + 1497) / 19608)||/||(1 - (26514 + 2947) / 44841)|
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))|
|=||(1268 / (1268 + 2947))||/||(694 / (694 + 1497))|
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)|
|=||(3893 / 10937)||/||(4981 / 15701)|
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)|
|=||((9030 + 2107) / 19608)||/||((6795 + 17611) / 44841)|
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|
|=||(1581 - 256||-||3523)||/||19608|
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.
eBay Inc has a M-score of -3.05 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
eBay Inc Annual Data
eBay Inc Quarterly Data