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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 -2.30.
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 * 1.3342||+||0.528 * 0.8592||+||0.404 * 1.0798||+||0.892 * 0.835||+||0.115 * 0.9158|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 2.023||+||4.679 * -0.0421||-||0.327 * 1.0357|
|This Year (Jun15) TTM:||Last Year (Mar14) TTM:|
|Accounts Receivable was $87.3 Mil.|
Revenue was 132.865 + 141.541 + 0 + 130.367 = $404.8 Mil.
Gross Profit was 58.194 + 62.792 + 0 + 52.193 = $173.2 Mil.
Total Current Assets was $250.1 Mil.
Total Assets was $1,272.8 Mil.
Property, Plant and Equipment(Net PPE) was $15.8 Mil.
Depreciation, Depletion and Amortization(DDA) was $104.8 Mil.
Selling, General & Admin. Expense(SGA) was $76.3 Mil.
Total Current Liabilities was $74.7 Mil.
Long-Term Debt was $297.9 Mil.
Net Income was 0.32 + 4.953 + 0 + -2.193 = $3.1 Mil.
Non Operating Income was -12.834 + -10.552 + 0 + -10.324 = $-33.7 Mil.
Cash Flow from Operations was 19.788 + 24.723 + 42.507 + 3.314 = $90.3 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)|
|=||(87.306 / 404.773)||/||(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)|
|=||(62.792 / 484.763)||/||(58.194 / 404.773)|
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 - (250.08 + 15.832) / 1272.8)||/||(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))||/||(104.78 / (104.78 + 15.832))|
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)|
|=||(76.293 / 404.773)||/||(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)|
|=||((297.9 + 74.704) / 1272.8)||/||((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|
|=||(3.08 - -33.71||-||90.332)||/||1272.8|
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 -2.76 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