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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 -2.25 suggests that the company is not a manipulator.
During the past 5 years, the highest Beneish M-Score of Groupon Inc was -2.25. The lowest was -3.75. And the median was -2.64.
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 * 1.1657||+||0.528 * 1.183||+||0.404 * 1.5523||+||0.892 * 1.1885||+||0.115 * 0.9161|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.8818||+||4.679 * -0.0843||-||0.327 * 1.0812|
|This Year (Jun14) TTM:||Last Year (Jun13) TTM:|
|Accounts Receivable was $134 Mil.|
Revenue was 751.576 + 757.637 + 768.447 + 595.059 = $2,873 Mil.
Gross Profit was 389.862 + 385.721 + 378.208 + 359.622 = $1,513 Mil.
Total Current Assets was $1,269 Mil.
Total Assets was $2,137 Mil.
Property, Plant and Equipment(Net PPE) was $173 Mil.
Depreciation, Depletion and Amortization(DDA) was $117 Mil.
Selling, General & Admin. Expense(SGA) was $1,513 Mil.
Total Current Liabilities was $1,245 Mil.
Long-Term Debt was $0 Mil.
Net Income was -22.875 + -37.795 + -81.247 + -2.58 = $-144 Mil.
Non Operating Income was -1.307 + -1.128 + -85.102 + 0.384 = $-87 Mil.
Cash Flow from Operations was -22.747 + -20.717 + 178.275 + -11.905 = $123 Mil.
|Accounts Receivable was $97 Mil.
Revenue was 608.747 + 601.402 + 638.302 + 568.552 = $2,417 Mil.
Gross Profit was 384.694 + 379.009 + 355.83 + 386.766 = $1,506 Mil.
Total Current Assets was $1,437 Mil.
Total Assets was $1,977 Mil.
Property, Plant and Equipment(Net PPE) was $126 Mil.
Depreciation, Depletion and Amortization(DDA) was $73 Mil.
Selling, General & Admin. Expense(SGA) was $1,443 Mil.
Total Current Liabilities was $1,065 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)|
|=||(134.127 / 2872.719)||/||(96.808 / 2417.003)|
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)|
|=||(385.721 / 2417.003)||/||(389.862 / 2872.719)|
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 - (1269.34 + 173.403) / 2137.439)||/||(1 - (1436.951 + 125.86) / 1976.668)|
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))|
|=||(73.443 / (73.443 + 125.86))||/||(116.679 / (116.679 + 173.403))|
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)|
|=||(1512.723 / 2872.719)||/||(1443.295 / 2417.003)|
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 + 1245.08) / 2137.439)||/||((0 + 1064.946) / 1976.668)|
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|
|=||(-144.497 - -87.153||-||122.906)||/||2137.439|
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 -2.25 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