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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 6 years, the highest Beneish M-Score of Groupon Inc was -2.55. The lowest was -3.75. And the median was -3.07.
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 * 1.0134||+||0.528 * 1.202||+||0.404 * 1.7102||+||0.892 * 1.2401||+||0.115 * 0.9026|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.8848||+||4.679 * -0.1475||-||0.327 * 1.0231|
|This Year (Dec14) TTM:||Last Year (Dec13) TTM:|
|Accounts Receivable was $105 Mil.|
Revenue was 925.421 + 757.054 + 751.576 + 757.637 = $3,192 Mil.
Gross Profit was 393.459 + 380.144 + 389.862 + 385.721 = $1,549 Mil.
Total Current Assets was $1,401 Mil.
Total Assets was $2,228 Mil.
Property, Plant and Equipment(Net PPE) was $182 Mil.
Depreciation, Depletion and Amortization(DDA) was $145 Mil.
Selling, General & Admin. Expense(SGA) was $1,565 Mil.
Total Current Liabilities was $1,326 Mil.
Long-Term Debt was $0 Mil.
Net Income was 8.788 + -21.208 + -22.875 + -37.795 = $-73 Mil.
Non Operating Income was -10.76 + -20.155 + -1.307 + -1.128 = $-33 Mil.
Cash Flow from Operations was 286.822 + 45.466 + -22.747 + -20.717 = $289 Mil.
|Accounts Receivable was $84 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.
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)|
|=||(105.154 / 3191.688)||/||(83.673 / 2573.655)|
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)|
|=||(380.144 / 2573.655)||/||(393.459 / 3191.688)|
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 - (1401.329 + 182.475) / 2227.597)||/||(1 - (1562.498 + 134.423) / 2042.01)|
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))|
|=||(89.449 / (89.449 + 134.423))||/||(144.921 / (144.921 + 182.475))|
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)|
|=||(1564.544 / 3191.688)||/||(1425.858 / 2573.655)|
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 + 1325.596) / 2227.597)||/||((0 + 1187.778) / 2042.01)|
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|
|=||(-73.09 - -33.35||-||288.824)||/||2227.597|
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 -2.55 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