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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.
Liberty Interactive Corp has a M-score of -2.78 suggests that the company is not a manipulator.
During the past 9 years, the highest Beneish M-Score of Liberty Interactive Corp was -2.25. The lowest was -3.30. And the median was -2.66.
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 Liberty Interactive Corp 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 * 0.9837||+||0.528 * 0.9072||+||0.404 * 0.9632||+||0.892 * 1.0877||+||0.115 * 0.8662|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.1872||+||4.679 * -0.0526||-||0.327 * 1.0176|
|This Year (Mar14) TTM:||Last Year (Mar13) TTM:|
|Accounts Receivable was $1,040 Mil.|
Revenue was 2728 + 3441 + 2500 + 2647 = $11,316 Mil.
Gross Profit was 1162 + 1350 + 1063 + 1126 = $4,701 Mil.
Total Current Assets was $4,529 Mil.
Total Assets was $24,662 Mil.
Property, Plant and Equipment(Net PPE) was $1,272 Mil.
Depreciation, Depletion and Amortization(DDA) was $945 Mil.
Selling, General & Admin. Expense(SGA) was $2,598 Mil.
Total Current Liabilities was $3,586 Mil.
Long-Term Debt was $6,608 Mil.
Net Income was 82 + 241 + 113 + 120 = $556 Mil.
Non Operating Income was -19 + 39 + 47 + -1 = $66 Mil.
Cash Flow from Operations was 526 + 609 + 305 + 346 = $1,786 Mil.
|Accounts Receivable was $972 Mil.
Revenue was 2664 + 3179 + 2196 + 2365 = $10,404 Mil.
Gross Profit was 1111 + 1144 + 789 + 877 = $3,921 Mil.
Total Current Assets was $4,033 Mil.
Total Assets was $25,354 Mil.
Property, Plant and Equipment(Net PPE) was $1,189 Mil.
Depreciation, Depletion and Amortization(DDA) was $696 Mil.
Selling, General & Admin. Expense(SGA) was $2,012 Mil.
Total Current Liabilities was $3,706 Mil.
Long-Term Debt was $6,593 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)|
|=||(1040 / 11316)||/||(972 / 10404)|
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)|
|=||(1350 / 10404)||/||(1162 / 11316)|
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 - (4529 + 1272) / 24662)||/||(1 - (4033 + 1189) / 25354)|
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))|
|=||(696 / (696 + 1189))||/||(945 / (945 + 1272))|
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)|
|=||(2598 / 11316)||/||(2012 / 10404)|
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)|
|=||((6608 + 3586) / 24662)||/||((6593 + 3706) / 25354)|
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|
|=||(556 - 66||-||1786)||/||24662|
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.
Liberty Interactive Corp has a M-score of -2.78 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
Liberty Interactive Corp Annual Data
Liberty Interactive Corp Quarterly Data