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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 6 years, the highest Beneish M-Score of Marcus & Millichap Inc was -1.92. The lowest was -2.71. And the median was -2.29.
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 Marcus & Millichap Inc 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 * 1.1442||+||0.528 * 1.0159||+||0.404 * 1.4095||+||0.892 * 1.111||+||0.115 * 1.1922|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0145||+||4.679 * -0.0267||-||0.327 * 0.8074|
|This Year (Sep16) TTM:||Last Year (Sep15) TTM:|
|Accounts Receivable was $4.9 Mil.|
Revenue was 180.634 + 183.387 + 164.272 + 203.156 = $731.4 Mil.
Gross Profit was 66.782 + 70.261 + 68.119 + 73.492 = $278.7 Mil.
Total Current Assets was $185.6 Mil.
Total Assets was $360.0 Mil.
Property, Plant and Equipment(Net PPE) was $15.6 Mil.
Depreciation, Depletion and Amortization(DDA) was $4.1 Mil.
Selling, General & Admin. Expense(SGA) was $162.0 Mil.
Total Current Liabilities was $64.8 Mil.
Long-Term Debt was $8.7 Mil.
Net Income was 15.144 + 17.524 + 14.815 + 19.949 = $67.4 Mil.
Non Operating Income was 0.719 + 0.618 + 0.23 + 0.42 = $2.0 Mil.
Cash Flow from Operations was 29.258 + 31.283 + -19.023 + 33.538 = $75.1 Mil.
|Accounts Receivable was $3.9 Mil.
Revenue was 165.876 + 173.482 + 146.541 + 172.444 = $658.3 Mil.
Gross Profit was 63.866 + 67.925 + 60.383 + 62.608 = $254.8 Mil.
Total Current Assets was $185.6 Mil.
Total Assets was $284.2 Mil.
Property, Plant and Equipment(Net PPE) was $9.7 Mil.
Depreciation, Depletion and Amortization(DDA) was $3.2 Mil.
Selling, General & Admin. Expense(SGA) was $143.8 Mil.
Total Current Liabilities was $62.2 Mil.
Long-Term Debt was $9.7 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)|
|=||(4.935 / 731.449)||/||(3.882 / 658.343)|
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)|
|=||(254.782 / 658.343)||/||(278.654 / 731.449)|
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 - (185.644 + 15.585) / 359.996)||/||(1 - (185.572 + 9.725) / 284.229)|
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))|
|=||(3.196 / (3.196 + 9.725))||/||(4.08 / (4.08 + 15.585))|
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)|
|=||(162.049 / 731.449)||/||(143.768 / 658.343)|
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)|
|=||((8.686 + 64.828) / 359.996)||/||((9.671 + 62.218) / 284.229)|
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|
|=||(67.432 - 1.987||-||75.056)||/||359.996|
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.
Marcus & Millichap Inc has a M-score of -2.12 signals that the company is likely to 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
Marcus & Millichap Inc Annual Data
Marcus & Millichap Inc Quarterly Data