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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 -1.79. The lowest was -3.30. And the median was -2.65.
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 * 0.7947||+||0.528 * 1.0094||+||0.404 * 0.9344||+||0.892 * 1.1156||+||0.115 * 0.992|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0219||+||4.679 * -0.1248||-||0.327 * 1.3336|
|This Year (Dec14) TTM:||Last Year (Dec13) TTM:|
|Accounts Receivable was $797 Mil.|
Revenue was 4921 + 4353 + 4366 + 4262 = $17,902 Mil.
Gross Profit was 3321 + 2964 + 2974 + 2911 = $12,170 Mil.
Total Current Assets was $26,531 Mil.
Total Assets was $45,132 Mil.
Property, Plant and Equipment(Net PPE) was $2,902 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,490 Mil.
Selling, General & Admin. Expense(SGA) was $5,430 Mil.
Total Current Liabilities was $17,531 Mil.
Long-Term Debt was $6,777 Mil.
Net Income was 1023 + 673 + 676 + -2326 = $46 Mil.
Non Operating Income was 0 + 0 + 0 + 0 = $0 Mil.
Cash Flow from Operations was 1641 + 1368 + 1494 + 1174 = $5,677 Mil.
|Accounts Receivable was $899 Mil.
Revenue was 4530 + 3892 + 3877 + 3748 = $16,047 Mil.
Gross Profit was 3081 + 2668 + 2666 + 2596 = $11,011 Mil.
Total Current Assets was $23,283 Mil.
Total Assets was $41,488 Mil.
Property, Plant and Equipment(Net PPE) was $2,760 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,400 Mil.
Selling, General & Admin. Expense(SGA) was $4,763 Mil.
Total Current Liabilities was $12,639 Mil.
Long-Term Debt was $4,117 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)|
|=||(797 / 17902)||/||(899 / 16047)|
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)|
|=||(2964 / 16047)||/||(3321 / 17902)|
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 - (26531 + 2902) / 45132)||/||(1 - (23283 + 2760) / 41488)|
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))|
|=||(1400 / (1400 + 2760))||/||(1490 / (1490 + 2902))|
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)|
|=||(5430 / 17902)||/||(4763 / 16047)|
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)|
|=||((6777 + 17531) / 45132)||/||((4117 + 12639) / 41488)|
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|
|=||(46 - 0||-||5677)||/||45132|
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 -3.29 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