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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 * 0.942||+||0.528 * 0.9521||+||0.404 * 1.0467||+||0.892 * 1.06||+||0.115 * 0.9495|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.1371||+||4.679 * 0.0249||-||0.327 * 1.0516|
|This Year (Jun15) TTM:||Last Year (Jun14) TTM:|
|Accounts Receivable was $223 Mil.|
Revenue was 771.132 + 772.512 + 830.754 + 782.231 = $3,157 Mil.
Gross Profit was 587.856 + 580.959 + 594.064 + 556.039 = $2,319 Mil.
Total Current Assets was $1,323 Mil.
Total Assets was $4,075 Mil.
Property, Plant and Equipment(Net PPE) was $297 Mil.
Depreciation, Depletion and Amortization(DDA) was $122 Mil.
Selling, General & Admin. Expense(SGA) was $1,713 Mil.
Total Current Liabilities was $715 Mil.
Long-Term Debt was $1,000 Mil.
Net Income was 59.305 + 26.405 + 70.172 + 326.812 = $483 Mil.
Non Operating Income was -1.638 + 6.988 + 11.371 + 3.501 = $20 Mil.
Cash Flow from Operations was 89.589 + -3.81 + 129.387 + 145.89 = $361 Mil.
|Accounts Receivable was $223 Mil.
Revenue was 756.315 + 740.247 + 724.455 + 756.872 = $2,978 Mil.
Gross Profit was 545.585 + 531.013 + 498.261 + 508.016 = $2,083 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 $1,421 Mil.
Total Current Liabilities was $588 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)|
|=||(223.106 / 3156.629)||/||(223.436 / 2977.889)|
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)|
|=||(580.959 / 2977.889)||/||(587.856 / 3156.629)|
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 - (1322.762 + 297.158) / 4075.058)||/||(1 - (1477.432 + 291.289) / 4167.478)|
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))|
|=||(110.945 / (110.945 + 291.289))||/||(121.656 / (121.656 + 297.158))|
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)|
|=||(1713.22 / 3156.629)||/||(1421.321 / 2977.889)|
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)|
|=||((1000 + 714.857) / 4075.058)||/||((1080 + 587.73) / 4167.478)|
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|
|=||(482.694 - 20.222||-||361.056)||/||4075.058|
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 -2.42 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