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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.
IAC/InterActiveCorp has a M-score of -2.81 suggests that the company is not a 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 -2.34.
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 * 0.9608||+||0.528 * 0.9272||+||0.404 * 0.8949||+||0.892 * 0.9856||+||0.115 * 1.0265|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0605||+||4.679 * -0.0219||-||0.327 * 1.2814|
|This Year (Jun14) TTM:||Last Year (Jun13) TTM:|
|Accounts Receivable was $223 Mil.|
Revenue was 756.315 + 740.247 + 724.455 + 756.872 = $2,978 Mil.
Gross Profit was 545.215 + 531.053 + 501.881 + 508.016 = $2,086 Mil.
Total Current Assets was $1,477 Mil.
Total Assets was $4,167 Mil.
Property, Plant and Equipment(Net PPE) was $291 Mil.
Depreciation, Depletion and Amortization(DDA) was $111 Mil.
Selling, General & Admin. Expense(SGA) was $1,423 Mil.
Total Current Liabilities was $588 Mil.
Long-Term Debt was $1,080 Mil.
Net Income was -17.996 + 35.885 + 76.917 + 96.94 = $192 Mil.
Non Operating Income was -69.75 + -1.958 + 9.743 + 13.466 = $-48 Mil.
Cash Flow from Operations was 106.067 + 42.704 + 86.631 + 96.067 = $331 Mil.
|Accounts Receivable was $236 Mil.
Revenue was 799.411 + 742.249 + 765.251 + 714.47 = $3,021 Mil.
Gross Profit was 526.589 + 486.4 + 497.333 + 452.195 = $1,963 Mil.
Total Current Assets was $1,071 Mil.
Total Assets was $3,812 Mil.
Property, Plant and Equipment(Net PPE) was $289 Mil.
Depreciation, Depletion and Amortization(DDA) was $114 Mil.
Selling, General & Admin. Expense(SGA) was $1,362 Mil.
Total Current Liabilities was $611 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)|
|=||(223.436 / 2977.889)||/||(235.95 / 3021.381)|
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)|
|=||(531.053 / 3021.381)||/||(545.215 / 2977.889)|
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 - (1477.432 + 291.289) / 4167.478)||/||(1 - (1070.735 + 289.493) / 3812.491)|
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))|
|=||(114.333 / (114.333 + 289.493))||/||(110.945 / (110.945 + 291.289))|
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)|
|=||(1423.328 / 2977.889)||/||(1361.79 / 3021.381)|
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 + 587.73) / 4167.478)||/||((580 + 610.656) / 3812.491)|
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|
|=||(191.746 - -48.499||-||331.469)||/||4167.478|
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 -2.81 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