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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 * 0.8025||+||0.528 * 1.0142||+||0.404 * 0.7883||+||0.892 * 1.0783||+||0.115 * 0.946|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.054||+||4.679 * -0.0639||-||0.327 * 1.003|
|This Year (Jun15) TTM:||Last Year (Jun14) TTM:|
|Accounts Receivable was $662 Mil.|
Revenue was 4379 + 4448 + 4921 + 4353 = $18,101 Mil.
Gross Profit was 3031 + 2998 + 3321 + 2964 = $12,314 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 $1,509 Mil.
Selling, General & Admin. Expense(SGA) was $5,763 Mil.
Total Current Liabilities was $17,060 Mil.
Long-Term Debt was $6,757 Mil.
Net Income was 83 + 626 + 1023 + 673 = $2,405 Mil.
Non Operating Income was 0 + 0 + 7 + 0 = $7 Mil.
Cash Flow from Operations was 1156 + 1151 + 1641 + 1368 = $5,316 Mil.
|Accounts Receivable was $765 Mil.
Revenue was 4103 + 4262 + 4530 + 3892 = $16,787 Mil.
Gross Profit was 2922 + 2911 + 3081 + 2668 = $11,582 Mil.
Total Current Assets was $22,378 Mil.
Total Assets was $41,640 Mil.
Property, Plant and Equipment(Net PPE) was $2,685 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,339 Mil.
Selling, General & Admin. Expense(SGA) was $5,071 Mil.
Total Current Liabilities was $17,538 Mil.
Long-Term Debt was $4,118 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)|
|=||(662 / 18101)||/||(765 / 16787)|
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)|
|=||(2998 / 16787)||/||(3031 / 18101)|
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 - (28549 + 2781) / 45658)||/||(1 - (22378 + 2685) / 41640)|
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))|
|=||(1339 / (1339 + 2685))||/||(1509 / (1509 + 2781))|
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)|
|=||(5763 / 18101)||/||(5071 / 16787)|
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)|
|=||((6757 + 17060) / 45658)||/||((4118 + 17538) / 41640)|
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|
|=||(2405 - 7||-||5316)||/||45658|
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 -2.99 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