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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 -2.82 suggests that the company is not a manipulator.
During the past 9 years, the highest Beneish M-Score of Liberty Interactive Corp was -2.22. The lowest was -3.25. And the median was -2.71.
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 * 0.9958||+||0.528 * 0.929||+||0.404 * 0.9662||+||0.892 * 1.075||+||0.115 * 0.942|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.158||+||4.679 * -0.0615||-||0.327 * 1.0896|
|This Year (Jun14) TTM:||Last Year (Jun13) TTM:|
|Accounts Receivable was $973 Mil.|
Revenue was 2818 + 2728 + 3441 + 2500 = $11,487 Mil.
Gross Profit was 1250 + 1162 + 1350 + 1063 = $4,825 Mil.
Total Current Assets was $4,757 Mil.
Total Assets was $24,722 Mil.
Property, Plant and Equipment(Net PPE) was $1,276 Mil.
Depreciation, Depletion and Amortization(DDA) was $945 Mil.
Selling, General & Admin. Expense(SGA) was $2,710 Mil.
Total Current Liabilities was $3,798 Mil.
Long-Term Debt was $6,620 Mil.
Net Income was 77 + 82 + 241 + 113 = $513 Mil.
Non Operating Income was -34 + -19 + 39 + 47 = $33 Mil.
Cash Flow from Operations was 561 + 526 + 609 + 304 = $2,000 Mil.
|Accounts Receivable was $909 Mil.
Revenue was 2647 + 2664 + 3179 + 2196 = $10,686 Mil.
Gross Profit was 1126 + 1111 + 1144 + 789 = $4,170 Mil.
Total Current Assets was $4,109 Mil.
Total Assets was $24,285 Mil.
Property, Plant and Equipment(Net PPE) was $1,175 Mil.
Depreciation, Depletion and Amortization(DDA) was $786 Mil.
Selling, General & Admin. Expense(SGA) was $2,177 Mil.
Total Current Liabilities was $3,433 Mil.
Long-Term Debt was $5,959 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)|
|=||(973 / 11487)||/||(909 / 10686)|
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)|
|=||(1162 / 10686)||/||(1250 / 11487)|
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 - (4757 + 1276) / 24722)||/||(1 - (4109 + 1175) / 24285)|
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))|
|=||(786 / (786 + 1175))||/||(945 / (945 + 1276))|
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)|
|=||(2710 / 11487)||/||(2177 / 10686)|
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)|
|=||((6620 + 3798) / 24722)||/||((5959 + 3433) / 24285)|
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|
|=||(513 - 33||-||2000)||/||24722|
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 -2.82 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