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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 * 1.183||+||0.528 * 1.011||+||0.404 * 1.4265||+||0.892 * 1.1699||+||0.115 * 1.2916|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9635||+||4.679 * -0.0139||-||0.327 * 0.7461|
|This Year (Mar16) TTM:||Last Year (Mar15) TTM:|
|Accounts Receivable was $6.4 Mil.|
Revenue was 164.272 + 203.156 + 165.876 + 173.482 = $706.8 Mil.
Gross Profit was 68.119 + 73.492 + 63.866 + 67.925 = $273.4 Mil.
Total Current Assets was $167.5 Mil.
Total Assets was $297.6 Mil.
Property, Plant and Equipment(Net PPE) was $12.4 Mil.
Depreciation, Depletion and Amortization(DDA) was $3.5 Mil.
Selling, General & Admin. Expense(SGA) was $154.1 Mil.
Total Current Liabilities was $39.9 Mil.
Long-Term Debt was $9.7 Mil.
Net Income was 14.815 + 19.949 + 15.176 + 17.556 = $67.5 Mil.
Non Operating Income was 0.23 + 0.42 + -0.464 + 0.362 = $0.5 Mil.
Cash Flow from Operations was -19.023 + 33.538 + 16.715 + 39.86 = $71.1 Mil.
|Accounts Receivable was $4.6 Mil.
Revenue was 146.541 + 172.444 + 150.889 + 134.265 = $604.1 Mil.
Gross Profit was 60.383 + 62.608 + 58.62 + 54.664 = $236.3 Mil.
Total Current Assets was $149.1 Mil.
Total Assets was $217.3 Mil.
Property, Plant and Equipment(Net PPE) was $8.0 Mil.
Depreciation, Depletion and Amortization(DDA) was $3.2 Mil.
Selling, General & Admin. Expense(SGA) was $136.7 Mil.
Total Current Liabilities was $37.9 Mil.
Long-Term Debt was $10.6 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)|
|=||(6.354 / 706.786)||/||(4.591 / 604.139)|
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)|
|=||(73.492 / 604.139)||/||(68.119 / 706.786)|
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 - (167.542 + 12.446) / 297.582)||/||(1 - (149.089 + 8.038) / 217.329)|
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))|
|=||(3.211 / (3.211 + 8.038))||/||(3.531 / (3.531 + 12.446))|
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)|
|=||(154.136 / 706.786)||/||(136.746 / 604.139)|
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)|
|=||((9.671 + 39.867) / 297.582)||/||((10.61 + 37.879) / 217.329)|
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|
|=||(67.496 - 0.548||-||71.09)||/||297.582|
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 -1.92 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