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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 -3.35. 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 * 0.7946||+||0.528 * 1.0092||+||0.404 * 0.8972||+||0.892 * 1.0922||+||0.115 * 1.0458|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.044||+||4.679 * -0.0594||-||0.327 * 1.1109|
|This Year (Mar15) TTM:||Last Year (Mar14) TTM:|
|Accounts Receivable was $703 Mil.|
Revenue was 4448 + 4921 + 4353 + 4366 = $18,088 Mil.
Gross Profit was 2998 + 3321 + 2964 + 2974 = $12,257 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 $1,489 Mil.
Selling, General & Admin. Expense(SGA) was $5,619 Mil.
Total Current Liabilities was $17,611 Mil.
Long-Term Debt was $6,795 Mil.
Net Income was 626 + 1023 + 673 + 676 = $2,998 Mil.
Non Operating Income was 0 + 7 + 0 + 0 = $7 Mil.
Cash Flow from Operations was 1151 + 1641 + 1368 + 1494 = $5,654 Mil.
|Accounts Receivable was $810 Mil.
Revenue was 4262 + 4530 + 3892 + 3877 = $16,561 Mil.
Gross Profit was 2911 + 3081 + 2668 + 2666 = $11,326 Mil.
Total Current Assets was $22,359 Mil.
Total Assets was $40,545 Mil.
Property, Plant and Equipment(Net PPE) was $2,686 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,453 Mil.
Selling, General & Admin. Expense(SGA) was $4,928 Mil.
Total Current Liabilities was $15,741 Mil.
Long-Term Debt was $4,124 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)|
|=||(703 / 18088)||/||(810 / 16561)|
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)|
|=||(3321 / 16561)||/||(2998 / 18088)|
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 - (26514 + 2947) / 44841)||/||(1 - (22359 + 2686) / 40545)|
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))|
|=||(1453 / (1453 + 2686))||/||(1489 / (1489 + 2947))|
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)|
|=||(5619 / 18088)||/||(4928 / 16561)|
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)|
|=||((6795 + 17611) / 44841)||/||((4124 + 15741) / 40545)|
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|
|=||(2998 - 7||-||5654)||/||44841|
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 -2.94 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