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Groupon Inc (NAS:GRPN)
Beneish M-Score
-3.35 (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 -3.35 suggests that the company is not a manipulator.

GRPN' s Beneish M-Score Range Over the Past 10 Years
Min: -3.5   Max: -2.23
Current: -3.35

-3.5
-2.23

During the past 7 years, the highest Beneish M-Score of Groupon Inc was -2.23. The lowest was -3.50. And the median was -2.95.


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 * 0.7161+0.528 * 1.0431+0.404 * 1.3525+0.892 * 1.0105+0.115 * 0.9738
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0687+4.679 * -0.1429-0.327 * 1.3049
=-3.35

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.

This Year (Jun16) TTM:Last Year (Jun15) TTM:
Accounts Receivable was $69 Mil.
Revenue was 756.03 + 731.971 + 917.17 + 713.595 = $3,119 Mil.
Gross Profit was 333.588 + 339.328 + 371.74 + 328.912 = $1,374 Mil.
Total Current Assets was $1,039 Mil.
Total Assets was $1,751 Mil.
Property, Plant and Equipment(Net PPE) was $185 Mil.
Depreciation, Depletion and Amortization(DDA) was $138 Mil.
Selling, General & Admin. Expense(SGA) was $1,499 Mil.
Total Current Liabilities was $1,077 Mil.
Long-Term Debt was $174 Mil.
Net Income was -54.904 + -49.119 + -46.528 + -27.615 = $-178 Mil.
Non Operating Income was -6.09 + 3.94 + -2.649 + -7.708 = $-13 Mil.
Cash Flow from Operations was -54.01 + -76.725 + 248.354 + -33.043 = $85 Mil.
Accounts Receivable was $95 Mil.
Revenue was 738.395 + 750.356 + 883.228 + 714.269 = $3,086 Mil.
Gross Profit was 337.007 + 347.406 + 378.109 + 355.278 = $1,418 Mil.
Total Current Assets was $1,397 Mil.
Total Assets was $2,021 Mil.
Property, Plant and Equipment(Net PPE) was $173 Mil.
Depreciation, Depletion and Amortization(DDA) was $124 Mil.
Selling, General & Admin. Expense(SGA) was $1,388 Mil.
Total Current Liabilities was $1,089 Mil.
Long-Term Debt was $17 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)
=(68.974 / 3118.766) / (95.311 / 3086.248)
=0.0221158 / 0.03088248
=0.7161

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)
=(1417.8 / 3086.248) / (1373.568 / 3118.766)
=0.45939276 / 0.44042035
=1.0431

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 - (1039.159 + 184.742) / 1751.442) / (1 - (1397.367 + 173.426) / 2020.826)
=0.30120381 / 0.22269755
=1.3525

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
=3118.766 / 3086.248
=1.0105

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))
=(124.156 / (124.156 + 173.426)) / (138.485 / (138.485 + 184.742))
=0.4172161 / 0.42844502
=0.9738

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)
=(1498.933 / 3118.766) / (1387.919 / 3086.248)
=0.48061733 / 0.44971078
=1.0687

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)
=((174.015 + 1077.122) / 1751.442) / ((17.251 + 1088.993) / 2020.826)
=0.71434681 / 0.5474217
=1.3049

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
=(-178.166 - -12.507 - 84.576) / 1751.442
=-0.1429

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 -3.35 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 own currency.

Groupon Inc Annual Data

Dec09Dec10Dec11Dec12Dec13Dec14Dec15
DSRI 0.49830.61350.78480.9160.7338
GMI 1.02821.21271.18621.21121.0848
AQI 0.44910.92440.81231.77060.9714
SGI 5.14611.44961.10251.1821.0254
DEPI 1.15081.21170.78961.01080.9865
SGAI 0.6340.65790.85310.85050.9846
LVGI 0.57771.02561.01130.99841.1538
TATA -0.3088-0.1565-0.1066-0.1472-0.1155
M-score -0.68-3.01-3.07-2.63-3.26

Groupon Inc Quarterly Data

Mar14Jun14Sep14Dec14Mar15Jun15Sep15Dec15Mar16Jun16
DSRI 1.07541.19251.20610.9160.6470.64660.57960.73380.78790.7161
GMI 1.18731.19071.20921.21121.16661.13931.11011.08481.06371.0431
AQI 1.42621.55231.42521.77060.4980.68520.85340.97142.16041.3525
SGI 1.13641.16181.1981.1821.13461.0991.05411.02541.01211.0105
DEPI 0.89030.99661.00111.01080.90930.88631.00140.98651.00220.9738
SGAI 0.85880.86110.84610.85080.86190.87450.92910.98421.03671.0687
LVGI 1.02471.08121.09620.99841.02960.93981.13631.15381.18991.3049
TATA -0.0993-0.0843-0.1138-0.1472-0.1513-0.1195-0.0895-0.1155-0.1049-0.1429
M-score -2.48-2.23-2.37-2.63-3.50-3.30-3.27-3.26-2.72-3.35
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