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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.
eBay Inc has a M-score of -3.20 suggests that the company is not a 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 * 0.8662||+||0.528 * 1.0125||+||0.404 * 1.0422||+||0.892 * 1.129||+||0.115 * 0.9523|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0016||+||4.679 * -0.134||-||0.327 * 1.3296|
|This Year (Sep14) TTM:||Last Year (Sep13) TTM:|
|Accounts Receivable was $755 Mil.|
Revenue was 4353 + 4366 + 4262 + 4530 = $17,511 Mil.
Gross Profit was 2964 + 2974 + 2911 + 3081 = $11,930 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 $1,487 Mil.
Selling, General & Admin. Expense(SGA) was $5,308 Mil.
Total Current Liabilities was $16,491 Mil.
Long-Term Debt was $7,346 Mil.
Net Income was 673 + 676 + -2326 + 850 = $-127 Mil.
Non Operating Income was 0 + 0 + 0 + 84 = $84 Mil.
Cash Flow from Operations was 1368 + 1494 + 1174 + 1713 = $5,749 Mil.
|Accounts Receivable was $772 Mil.
Revenue was 3892 + 3877 + 3748 + 3993 = $15,510 Mil.
Gross Profit was 2668 + 2666 + 2596 + 2769 = $10,699 Mil.
Total Current Assets was $23,476 Mil.
Total Assets was $40,067 Mil.
Property, Plant and Equipment(Net PPE) was $2,763 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,351 Mil.
Selling, General & Admin. Expense(SGA) was $4,694 Mil.
Total Current Liabilities was $12,028 Mil.
Long-Term Debt was $4,123 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)|
|=||(755 / 17511)||/||(772 / 15510)|
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)|
|=||(2974 / 15510)||/||(2964 / 17511)|
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 - (25654 + 2825) / 44476)||/||(1 - (23476 + 2763) / 40067)|
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))|
|=||(1351 / (1351 + 2763))||/||(1487 / (1487 + 2825))|
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)|
|=||(5308 / 17511)||/||(4694 / 15510)|
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)|
|=||((7346 + 16491) / 44476)||/||((4123 + 12028) / 40067)|
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|
|=||(-127 - 84||-||5749)||/||44476|
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 -3.20 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