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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 * 0.9274||+||0.528 * 0.943||+||0.404 * 1.0257||+||0.892 * 1.04||+||0.115 * 0.9989|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.1396||+||4.679 * 0.0191||-||0.327 * 1.0831|
|This Year (Mar15) TTM:||Last Year (Mar14) TTM:|
|Accounts Receivable was $232 Mil.|
Revenue was 772.512 + 830.754 + 782.231 + 756.315 = $3,142 Mil.
Gross Profit was 580.959 + 594.064 + 556.039 + 545.215 = $2,276 Mil.
Total Current Assets was $1,294 Mil.
Total Assets was $3,958 Mil.
Property, Plant and Equipment(Net PPE) was $298 Mil.
Depreciation, Depletion and Amortization(DDA) was $120 Mil.
Selling, General & Admin. Expense(SGA) was $1,647 Mil.
Total Current Liabilities was $626 Mil.
Long-Term Debt was $1,080 Mil.
Net Income was 26.405 + 70.172 + 326.812 + -17.996 = $405 Mil.
Non Operating Income was 6.988 + 11.371 + 3.501 + -69.75 = $-48 Mil.
Cash Flow from Operations was -3.81 + 129.387 + 145.89 + 106.13 = $378 Mil.
|Accounts Receivable was $241 Mil.
Revenue was 740.247 + 724.455 + 756.872 + 799.411 = $3,021 Mil.
Gross Profit was 531.013 + 498.261 + 508.016 + 526.589 = $2,064 Mil.
Total Current Assets was $1,471 Mil.
Total Assets was $4,224 Mil.
Property, Plant and Equipment(Net PPE) was $291 Mil.
Depreciation, Depletion and Amortization(DDA) was $117 Mil.
Selling, General & Admin. Expense(SGA) was $1,390 Mil.
Total Current Liabilities was $601 Mil.
Long-Term Debt was $1,080 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)|
|=||(232.464 / 3141.812)||/||(241.017 / 3020.985)|
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)|
|=||(594.064 / 3020.985)||/||(580.959 / 3141.812)|
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 - (1293.943 + 297.956) / 3958.105)||/||(1 - (1471.076 + 291.111) / 4224.056)|
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))|
|=||(117.455 / (117.455 + 291.111))||/||(120.408 / (120.408 + 297.956))|
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)|
|=||(1646.979 / 3141.812)||/||(1389.602 / 3020.985)|
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 + 625.752) / 3958.105)||/||((1080 + 600.643) / 4224.056)|
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|
|=||(405.393 - -47.89||-||377.597)||/||3958.105|
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 -2.49 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