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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 Bankrate Inc was 2.07. The lowest was -4.48. And the median was -2.26.
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 Bankrate 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 * 1.1928||+||0.528 * 0.6497||+||0.404 * 1.0681||+||0.892 * 0.8537||+||0.115 * 0.9027|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 3.3552||+||4.679 * -0.0325||-||0.327 * 1.0368|
|This Year (Mar15) TTM:||Last Year (Mar14) TTM:|
|Accounts Receivable was $79.8 Mil.|
Revenue was 141.541 + 0 + 141.649 + 130.662 = $413.9 Mil.
Gross Profit was 62.792 + 0 + 87.187 + 84.168 = $234.1 Mil.
Total Current Assets was $260.0 Mil.
Total Assets was $1,260.5 Mil.
Property, Plant and Equipment(Net PPE) was $14.2 Mil.
Depreciation, Depletion and Amortization(DDA) was $105.3 Mil.
Selling, General & Admin. Expense(SGA) was $129.4 Mil.
Total Current Liabilities was $71.6 Mil.
Long-Term Debt was $297.7 Mil.
Net Income was 4.953 + 0 + 8.263 + -2.246 = $11.0 Mil.
Non Operating Income was -10.552 + 0 + -10.464 + -10.318 = $-31.3 Mil.
Cash Flow from Operations was 24.723 + 42.507 + 0 + 16.011 = $83.2 Mil.
|Accounts Receivable was $78.4 Mil.
Revenue was 136.275 + 121.764 + 121.178 + 105.546 = $484.8 Mil.
Gross Profit was 57.767 + -28.233 + 80.654 + 68.004 = $178.2 Mil.
Total Current Assets was $336.4 Mil.
Total Assets was $1,311.4 Mil.
Property, Plant and Equipment(Net PPE) was $14.3 Mil.
Depreciation, Depletion and Amortization(DDA) was $55.5 Mil.
Selling, General & Admin. Expense(SGA) was $45.2 Mil.
Total Current Liabilities was $73.5 Mil.
Long-Term Debt was $297.2 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)|
|=||(79.807 / 413.852)||/||(78.371 / 484.763)|
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)|
|=||(0 / 484.763)||/||(62.792 / 413.852)|
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 - (260.039 + 14.176) / 1260.479)||/||(1 - (336.43 + 14.265) / 1311.433)|
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))|
|=||(55.521 / (55.521 + 14.265))||/||(105.289 / (105.289 + 14.176))|
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)|
|=||(129.375 / 413.852)||/||(45.166 / 484.763)|
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)|
|=||((297.748 + 71.646) / 1260.479)||/||((297.162 + 73.528) / 1311.433)|
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|
|=||(10.97 - -31.334||-||83.241)||/||1260.479|
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.
Bankrate Inc has a M-score of -3.17 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
Bankrate Inc Annual Data
Bankrate Inc Quarterly Data