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Groupon Inc (NAS:GRPN)
Beneish M-Score
-3.20 (As of Today)

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 -3.20 suggests that the company is not a manipulator.

GRPN' s Beneish M-Score Range Over the Past 10 Years
Min: -3.5   Max: -2.25
Current: -3.2

-3.5
-2.25

During the past 7 years, the highest Beneish M-Score of Groupon Inc was -2.25. The lowest was -3.50. And the median was -3.05.


Definition

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 * 0.9734+0.528 * 1.0346+0.404 * 1.2113+0.892 * 0.9993+0.115 * 0.9349
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0008+4.679 * -0.1603-0.327 * 1.1313
=-3.20

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

This Year (Sep16) TTM:Last Year (Sep15) TTM:
Accounts Receivable was $74 Mil.
Revenue was 720.468 + 756.03 + 731.971 + 917.17 = $3,126 Mil.
Gross Profit was 314.117 + 333.588 + 339.328 + 371.74 = $1,359 Mil.
Total Current Assets was $909 Mil.
Total Assets was $1,614 Mil.
Property, Plant and Equipment(Net PPE) was $180 Mil.
Depreciation, Depletion and Amortization(DDA) was $136 Mil.
Selling, General & Admin. Expense(SGA) was $1,453 Mil.
Total Current Liabilities was $984 Mil.
Long-Term Debt was $200 Mil.
Net Income was -37.976 + -54.904 + -49.119 + -46.528 = $-189 Mil.
Non Operating Income was -1.843 + -6.09 + 3.94 + -2.649 = $-7 Mil.
Cash Flow from Operations was -40.822 + -54.01 + -76.725 + 248.354 = $77 Mil.
Accounts Receivable was $76 Mil.
Revenue was 713.595 + 738.395 + 750.356 + 925.421 = $3,128 Mil.
Gross Profit was 328.912 + 337.007 + 347.406 + 393.459 = $1,407 Mil.
Total Current Assets was $1,283 Mil.
Total Assets was $2,031 Mil.
Property, Plant and Equipment(Net PPE) was $203 Mil.
Depreciation, Depletion and Amortization(DDA) was $137 Mil.
Selling, General & Admin. Expense(SGA) was $1,452 Mil.
Total Current Liabilities was $1,283 Mil.
Long-Term Debt was $34 Mil.



1. DSRI = Days Sales in Receivables Index

Measured as the ratio of days’ sales in receivables in year t to year t-1.

A large increase in DSR could be indicative of revenue inflation.

DSRI=(Receivables_t / Revenue_t) / (Receivables_t-1 / Revenue_t-1)
=(74.047 / 3125.639) / (76.121 / 3127.767)
=0.0236902 / 0.02433717
=0.9734

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.

GMI=GrossMargin_t-1 / GrossMargin_t
=(GrossProfit_t-1 / Revenue_t-1) / (GrossProfit_t / Revenue_t)
=(1406.784 / 3127.767) / (1358.773 / 3125.639)
=0.44977263 / 0.43471847
=1.0346

3. AQI = Asset Quality Index

AQI is the ratio of asset quality in year t to year t-1.

Asset quality is measured as the ratio of non-current assets other than plant, property and equipment to total assets.

AQI=(1 - (CurrentAssets_t + PPE_t) / TotalAssets_t) / (1 - (CurrentAssets_t-1 + PPE_t-1) / TotalAssets_t-1)
=(1 - (909.074 + 179.987) / 1613.541) / (1 - (1283.015 + 202.714) / 2030.641)
=0.32504907 / 0.26834482
=1.2113

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.

SGI=Sales_t / Sales_t-1
=Revenue_t / Revenue_t-1
=3125.639 / 3127.767
=0.9993

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))
=(136.584 / (136.584 + 202.714)) / (136.103 / (136.103 + 179.987))
=0.40254879 / 0.43058306
=0.9349

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)
=(1452.51 / 3125.639) / (1452.322 / 3127.767)
=0.46470818 / 0.4643319
=1.0008

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)
=((199.713 + 984.468) / 1613.541) / ((34.398 + 1282.928) / 2030.641)
=0.73390202 / 0.64872422
=1.1313

8. TATA = Total Accruals to Total Assets

Total accruals calculated as the change in working capital accounts other than cash less depreciation.

TATA=(IncomefromContinuingOperations_t - CashFlowsfromOperations_t) / TotalAssets_t
=(NetIncome_t - NonOperatingIncome_t - CashFlowsfromOperations_t) / TotalAssets_t
=(-188.527 - -6.642 - 76.797) / 1613.541
=-0.1603

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 -3.20 suggests that the company will not be a manipulator.


Related Terms

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


Historical Data

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

Groupon Inc Annual Data

Dec09Dec10Dec11Dec12Dec13Dec14Dec15
DSRI 0.49830.61350.78481.01340.6633
GMI 1.02821.21271.18621.2021.0932
AQI 0.44910.92440.81231.71021.0058
SGI 5.14611.44961.10251.24010.9774
DEPI 1.15081.21170.78960.90261.1048
SGAI 0.6340.65790.85310.88380.9474
LVGI 0.57771.02561.01611.03621.1349
TATA -0.3061-0.1556-0.1066-0.1472-0.1155
M-score -0.66-3.01-3.07-2.55-3.32

Groupon Inc Quarterly Data

Jun14Sep14Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16
DSRI 1.16571.16341.01340.62930.64370.59280.66330.81880.73580.9734
GMI 1.1831.19761.2021.16451.14591.12381.09321.06851.04391.0346
AQI 1.55231.42521.71020.4980.68520.85341.00582.16041.35251.2113
SGI 1.18851.24191.24011.16651.10391.03070.97740.97380.98350.9993
DEPI 0.91610.89620.90260.86280.90371.08241.10481.10491.03880.9349
SGAI 0.88180.87240.88480.87330.86850.90840.94671.00961.05091.0008
LVGI 1.08121.09621.03621.04510.93981.13631.13491.17221.30491.1313
TATA -0.0843-0.1138-0.1472-0.15-0.1164-0.0895-0.1155-0.1067-0.1464-0.1603
M-score -2.25-2.39-2.55-3.50-3.28-3.26-3.32-2.71-3.36-3.20
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