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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 13 years, the highest Beneish M-Score of IAC/InterActiveCorp was 84.96. The lowest was -4.57. And the median was -2.35.
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 IAC/InterActiveCorp 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 * 1.1421||+||0.528 * 0.927||+||0.404 * 0.9345||+||0.892 * 0.9802||+||0.115 * 1.0728|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.1149||+||4.679 * 0.0233||-||0.327 * 1.3172|
|This Year (Sep14) TTM:||Last Year (Sep13) TTM:|
|Accounts Receivable was $235 Mil.|
Revenue was 782.231 + 756.315 + 740.247 + 724.455 = $3,003 Mil.
Gross Profit was 556.039 + 545.215 + 531.053 + 501.881 = $2,134 Mil.
Total Current Assets was $1,455 Mil.
Total Assets was $4,238 Mil.
Property, Plant and Equipment(Net PPE) was $301 Mil.
Depreciation, Depletion and Amortization(DDA) was $115 Mil.
Selling, General & Admin. Expense(SGA) was $1,484 Mil.
Total Current Liabilities was $654 Mil.
Long-Term Debt was $1,080 Mil.
Net Income was 326.812 + -17.996 + 35.885 + 76.917 = $422 Mil.
Non Operating Income was 3.501 + -69.75 + -1.958 + 9.743 = $-58 Mil.
Cash Flow from Operations was 145.89 + 106.067 + 42.704 + 86.631 = $381 Mil.
|Accounts Receivable was $210 Mil.
Revenue was 756.872 + 799.411 + 742.249 + 765.251 = $3,064 Mil.
Gross Profit was 508.016 + 526.589 + 486.4 + 497.333 = $2,018 Mil.
Total Current Assets was $1,130 Mil.
Total Assets was $3,805 Mil.
Property, Plant and Equipment(Net PPE) was $290 Mil.
Depreciation, Depletion and Amortization(DDA) was $122 Mil.
Selling, General & Admin. Expense(SGA) was $1,358 Mil.
Total Current Liabilities was $602 Mil.
Long-Term Debt was $580 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)|
|=||(235.035 / 3003.248)||/||(209.949 / 3063.783)|
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)|
|=||(545.215 / 3063.783)||/||(556.039 / 3003.248)|
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 - (1455.279 + 300.955) / 4238.41)||/||(1 - (1129.921 + 290.47) / 3804.782)|
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))|
|=||(122.492 / (122.492 + 290.47))||/||(115.008 / (115.008 + 300.955))|
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)|
|=||(1483.885 / 3003.248)||/||(1357.845 / 3063.783)|
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)|
|=||((1080 + 653.693) / 4238.41)||/||((580 + 601.551) / 3804.782)|
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|
|=||(421.618 - -58.464||-||381.292)||/||4238.41|
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.
IAC/InterActiveCorp has a M-score of -2.44 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
IAC/InterActiveCorp Annual Data
IAC/InterActiveCorp Quarterly Data