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GuruFocus has detected 5 Warning Signs with eBay Inc $EBAY.
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eBay Inc (NAS:EBAY)
Beneish M-Score
-1.54 (As of Today)

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.

eBay Inc has a M-score of -1.54 signals that the company is a manipulator.

EBAY' s Beneish M-Score Range Over the Past 10 Years
Min: -3.26   Max: -1.54
Current: -1.54

-3.26
-1.54

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.


Definition

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
=-1.54

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

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

Measured as the ratio of days’ sales in receivables in year t to year t-1.

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)
=0.06593162 / 0.07204376
=0.9152

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.

GMI=GrossMargin_t-1 / GrossMargin_t
=(GrossProfit_t-1 / Revenue_t-1) / (GrossProfit_t / Revenue_t)
=(6821 / 8592) / (6972 / 8979)
=0.79387803 / 0.77647845
=1.0224

3. AQI = Asset Quality Index

AQI is the ratio of asset quality in year t to year t-1.

Asset quality is measured as the ratio of non-current assets other than plant, property and equipment to total assets.

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)
=0.56426385 / 0.46730498
=1.2075

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.

SGI=Sales_t / Sales_t-1
=Revenue_t / Revenue_t-1
=8979 / 8592
=1.045

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))
=0.30655957 / 0.31028207
=0.988

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)
=0.36396035 / 0.39443669
=0.9227

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)
=0.47620246 / 0.50757533
=0.9382

8. TATA = Total Accruals to Total Assets

Total accruals calculated as the change in working capital accounts other than cash less depreciation.

TATA=(IncomefromContinuingOperations_t - CashFlowsfromOperations_t) / TotalAssets_t
=(NetIncome_t - NonOperatingIncome_t - CashFlowsfromOperations_t) / TotalAssets_t
=(7266 - 83 - 2826) / 23847
=0.1827

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.


Related Terms

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


Historical Data

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

eBay Inc Annual Data

Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15Dec16
DSRI 0.9510.81350.91641.04751.19670.9981.86390.62691.05540.9152
GMI 1.0251.0421.03250.99431.02421.00370.85491.01051.02131.0224
AQI 0.83121.12160.90210.92141.07330.76671.04681.01871.23231.2075
SGI 1.28521.11331.02181.04911.27261.20770.58681.06460.97751.045
DEPI 1.01030.93120.98331.15671.02680.98811.68470.61351.02610.988
SGAI 0.92280.83971.12260.87930.97940.97651.15041.03471.04090.9227
LVGI 1.08081.1780.83261.3751.11131.3410.99621.33360.94240.9382
TATA -0.1492-0.0707-0.0282-0.0394-0.0548-0.0365-0.0542-0.1245-0.12930.1827
M-score -3.04-2.85-2.66-2.70-2.30-2.67-2.31-3.49-2.93-1.54

eBay Inc Quarterly Data

Sep14Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16Dec16
DSRI 2.09080.42930.71560.90070.66541.54151.04560.93311.01510.9152
GMI 0.78141.11291.04841.0151.10380.92730.9771.02431.02571.0224
AQI 1.04221.01870.89720.78831.29221.23231.25021.36710.96481.2075
SGI 0.46781.55481.21270.96081.18440.66930.81491.01671.03641.045
DEPI 6.72640.61351.55361.44740.1591.02610.42630.40150.9990.988
SGAI 1.36130.90780.98751.07050.95251.18651.06520.92250.93450.9227
LVGI 1.32961.33361.11091.0031.14470.94241.04361.07970.9020.9382
TATA -0.1346-0.1245-0.059-0.0635-0.1283-0.1293-0.0984-0.0593-0.06960.1827
M-score -2.19-3.16-2.81-2.94-3.19-2.84-3.07-2.72-2.72-1.54
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