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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 * 0.9331||+||0.528 * 1.0243||+||0.404 * 1.3671||+||0.892 * 1.0167||+||0.115 * 0.4015|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9225||+||4.679 * -0.0727||-||0.327 * 1.0797|
|This Year (Jun16) TTM:||Last Year (Jun15) TTM:|
|Accounts Receivable was $628 Mil.|
Revenue was 2230 + 2137 + 2322 + 2099 = $8,788 Mil.
Gross Profit was 1737 + 1660 + 1829 + 1666 = $6,892 Mil.
Total Current Assets was $9,914 Mil.
Total Assets was $19,993 Mil.
Property, Plant and Equipment(Net PPE) was $1,502 Mil.
Depreciation, Depletion and Amortization(DDA) was $687 Mil.
Selling, General & Admin. Expense(SGA) was $3,214 Mil.
Total Current Liabilities was $2,206 Mil.
Long-Term Debt was $9,054 Mil.
Net Income was 435 + 482 + 477 + 539 = $1,933 Mil.
Non Operating Income was 0 + 0 + 256 + 0 = $256 Mil.
Cash Flow from Operations was 763 + 641 + 1040 + 686 = $3,130 Mil.
|Accounts Receivable was $662 Mil.
Revenue was 2110 + 2061 + 2323 + 2150 = $8,644 Mil.
Gross Profit was 1676 + 1650 + 1881 + 1737 = $6,944 Mil.
Total Current Assets was $28,549 Mil.
Total Assets was $45,658 Mil.
Property, Plant and Equipment(Net PPE) was $2,781 Mil.
Depreciation, Depletion and Amortization(DDA) was $401 Mil.
Selling, General & Admin. Expense(SGA) was $3,427 Mil.
Total Current Liabilities was $17,060 Mil.
Long-Term Debt was $6,757 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)|
|=||(628 / 8788)||/||(662 / 8644)|
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)|
|=||(6944 / 8644)||/||(6892 / 8788)|
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 - (9914 + 1502) / 19993)||/||(1 - (28549 + 2781) / 45658)|
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))|
|=||(401 / (401 + 2781))||/||(687 / (687 + 1502))|
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)|
|=||(3214 / 8788)||/||(3427 / 8644)|
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)|
|=||((9054 + 2206) / 19993)||/||((6757 + 17060) / 45658)|
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|
|=||(1933 - 256||-||3130)||/||19993|
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 -2.79 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