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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 -1.54. The lowest was -3.26. And the median was -2.61.
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 * 0.9152||+||0.528 * 1.0224||+||0.404 * 1.2075||+||0.892 * 1.045||+||0.115 * 0.988|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9227||+||4.679 * 0.1827||-||0.327 * 0.9382|
|This Year (Dec16) TTM:||Last Year (Dec15) TTM:|
|Accounts Receivable was $592 Mil.|
Revenue was 2395 + 2217 + 2230 + 2137 = $8,979 Mil.
Gross Profit was 1856 + 1719 + 1737 + 1660 = $6,972 Mil.
Total Current Assets was $8,875 Mil.
Total Assets was $23,847 Mil.
Property, Plant and Equipment(Net PPE) was $1,516 Mil.
Depreciation, Depletion and Amortization(DDA) was $682 Mil.
Selling, General & Admin. Expense(SGA) was $3,268 Mil.
Total Current Liabilities was $3,847 Mil.
Long-Term Debt was $7,509 Mil.
Net Income was 5936 + 413 + 435 + 482 = $7,266 Mil.
Non Operating Income was 83 + 0 + 0 + 0 = $83 Mil.
Cash Flow from Operations was 620 + 802 + 763 + 641 = $2,826 Mil.
|Accounts Receivable was $619 Mil.
Revenue was 2322 + 2099 + 2110 + 2061 = $8,592 Mil.
Gross Profit was 1829 + 1666 + 1676 + 1650 = $6,821 Mil.
Total Current Assets was $7,904 Mil.
Total Assets was $17,755 Mil.
Property, Plant and Equipment(Net PPE) was $1,554 Mil.
Depreciation, Depletion and Amortization(DDA) was $687 Mil.
Selling, General & Admin. Expense(SGA) was $3,389 Mil.
Total Current Liabilities was $2,263 Mil.
Long-Term Debt was $6,749 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)|
|=||(592 / 8979)||/||(619 / 8592)|
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)|
|=||(6821 / 8592)||/||(6972 / 8979)|
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 - (8875 + 1516) / 23847)||/||(1 - (7904 + 1554) / 17755)|
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))|
|=||(687 / (687 + 1554))||/||(682 / (682 + 1516))|
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)|
|=||(3268 / 8979)||/||(3389 / 8592)|
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)|
|=||((7509 + 3847) / 23847)||/||((6749 + 2263) / 17755)|
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|
|=||(7266 - 83||-||2826)||/||23847|
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 -1.54 signals that the company is likely to 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