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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.
Groupon Inc has a M-score of -2.79 suggests that the company is not a manipulator.
During the past 5 years, the highest Beneish M-Score of Groupon Inc was -2.79. The lowest was -3.75. And the median was -3.27.
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 Groupon 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 * 1.0953||+||0.528 * 1.1862||+||0.404 * 0.8123||+||0.892 * 1.1025||+||0.115 * 0.7896|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.8531||+||4.679 * -0.1095||-||0.327 * 1.0113|
|This Year (Dec13) TTM:||Last Year (Dec12) TTM:|
|Accounts Receivable was $137 Mil.|
Revenue was 768.447 + 595.059 + 608.747 + 601.402 = $2,574 Mil.
Gross Profit was 378.208 + 359.622 + 384.694 + 379.009 = $1,502 Mil.
Total Current Assets was $1,562 Mil.
Total Assets was $2,042 Mil.
Property, Plant and Equipment(Net PPE) was $134 Mil.
Depreciation, Depletion and Amortization(DDA) was $89 Mil.
Selling, General & Admin. Expense(SGA) was $1,426 Mil.
Total Current Liabilities was $1,188 Mil.
Long-Term Debt was $0 Mil.
Net Income was -81.247 + -2.58 + -7.574 + -3.992 = $-95 Mil.
Non Operating Income was -85.102 + 0.384 + -5.579 + -0.019 = $-90 Mil.
Cash Flow from Operations was 178.275 + -11.905 + 43.302 + 8.76 = $218 Mil.
|Accounts Receivable was $113 Mil.
Revenue was 638.302 + 568.552 + 568.335 + 559.283 = $2,334 Mil.
Gross Profit was 355.83 + 386.766 + 433.151 + 439.785 = $1,616 Mil.
Total Current Assets was $1,488 Mil.
Total Assets was $2,031 Mil.
Property, Plant and Equipment(Net PPE) was $121 Mil.
Depreciation, Depletion and Amortization(DDA) was $56 Mil.
Selling, General & Admin. Expense(SGA) was $1,516 Mil.
Total Current Liabilities was $1,168 Mil.
Long-Term Debt was $0 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)|
|=||(136.633 / 2573.655)||/||(113.152 / 2334.472)|
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)|
|=||(359.622 / 2334.472)||/||(378.208 / 2573.655)|
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 - (1562.498 + 134.423) / 2042.01)||/||(1 - (1487.786 + 121.072) / 2031.474)|
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))|
|=||(55.801 / (55.801 + 121.072))||/||(89.449 / (89.449 + 134.423))|
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)|
|=||(1425.79 / 2573.655)||/||(1515.934 / 2334.472)|
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)|
|=||((0 + 1187.778) / 2042.01)||/||((0 + 1168.441) / 2031.474)|
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|
|=||(-95.393 - -90.316||-||218.432)||/||2042.01|
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.
Groupon Inc has a M-score of -2.79 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
Groupon Inc Annual Data
Groupon Inc Quarterly Data