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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 -1.89. The lowest was -3.68. And the median was -2.75.
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 * 0.4315||+||0.528 * 1.2215||+||0.404 * 1.2922||+||0.892 * 1.8262||+||0.115 * 0.159|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.8405||+||4.679 * -0.1301||-||0.327 * 1.1447|
|This Year (Sep15) TTM:||Last Year (Sep14) TTM:|
|Accounts Receivable was $595 Mil.|
Revenue was 2099 + 4379 + 4448 + 2323 = $13,249 Mil.
Gross Profit was 1666 + 3031 + 2998 + 1881 = $9,576 Mil.
Total Current Assets was $8,280 Mil.
Total Assets was $18,338 Mil.
Property, Plant and Equipment(Net PPE) was $1,535 Mil.
Depreciation, Depletion and Amortization(DDA) was $680 Mil.
Selling, General & Admin. Expense(SGA) was $4,588 Mil.
Total Current Liabilities was $4,436 Mil.
Long-Term Debt was $6,814 Mil.
Net Income was 539 + 83 + 626 + 1023 = $2,271 Mil.
Non Operating Income was 0 + 0 + 0 + 23 = $23 Mil.
Cash Flow from Operations was 686 + 1156 + 1151 + 1641 = $4,634 Mil.
|Accounts Receivable was $755 Mil.
Revenue was 2150 + 4103 + 4262 + -3260 = $7,255 Mil.
Gross Profit was 1737 + 2922 + 2911 + -1165 = $6,405 Mil.
Total Current Assets was $25,654 Mil.
Total Assets was $44,476 Mil.
Property, Plant and Equipment(Net PPE) was $2,825 Mil.
Depreciation, Depletion and Amortization(DDA) was $145 Mil.
Selling, General & Admin. Expense(SGA) was $2,989 Mil.
Total Current Liabilities was $16,491 Mil.
Long-Term Debt was $7,346 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)|
|=||(595 / 13249)||/||(755 / 7255)|
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)|
|=||(3031 / 7255)||/||(1666 / 13249)|
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 - (8280 + 1535) / 18338)||/||(1 - (25654 + 2825) / 44476)|
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))|
|=||(145 / (145 + 2825))||/||(680 / (680 + 1535))|
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)|
|=||(4588 / 13249)||/||(2989 / 7255)|
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)|
|=||((6814 + 4436) / 18338)||/||((7346 + 16491) / 44476)|
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|
|=||(2271 - 23||-||4634)||/||18338|
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 -2.76 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