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GuruFocus has detected 1 Warning Sign with Bankrate Inc $RATE.
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Bankrate Inc (NYSE:RATE)
Beneish M-Score
-2.90 (As of Today)

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.

Bankrate Inc has a M-score of -2.90 suggests that the company is not a manipulator.

RATE' s Beneish M-Score Range Over the Past 10 Years
Min: -4.02   Max: 1.98
Current: -2.9

-4.02
1.98

During the past 13 years, the highest Beneish M-Score of Bankrate Inc was 1.98. The lowest was -4.02. And the median was -2.35.


Definition

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 * 0.7949+0.528 * 1.1199+0.404 * 1.0411+0.892 * 1.1674+0.115 * 1.1826
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.1187+4.679 * -0.0959-0.327 * 1.0316
=-2.90

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

This Year (Dec16) TTM:Last Year (Dec15) TTM:
Accounts Receivable was $52.2 Mil.
Revenue was 113.583 + 128.798 + 98.302 + 93.278 = $434.0 Mil.
Gross Profit was 50.973 + 64.282 + 45.661 + 46.073 = $207.0 Mil.
Total Current Assets was $270.9 Mil.
Total Assets was $1,083.9 Mil.
Property, Plant and Equipment(Net PPE) was $15.4 Mil.
Depreciation, Depletion and Amortization(DDA) was $42.2 Mil.
Selling, General & Admin. Expense(SGA) was $103.0 Mil.
Total Current Liabilities was $53.8 Mil.
Long-Term Debt was $295.7 Mil.
Net Income was -4.146 + 10.686 + -40.956 + 0.283 = $-34.1 Mil.
Non Operating Income was 0 + 0 + -0.265 + -9.71 = $-10.0 Mil.
Cash Flow from Operations was 42.531 + 19.544 + 10.796 + 6.885 = $79.8 Mil.
Accounts Receivable was $56.3 Mil.
Revenue was 93.745 + 99.659 + 89.334 + 89.01 = $371.7 Mil.
Gross Profit was 48.184 + 55.133 + 47.566 + 47.7 = $198.6 Mil.
Total Current Assets was $320.3 Mil.
Total Assets was $1,127.0 Mil.
Property, Plant and Equipment(Net PPE) was $10.2 Mil.
Depreciation, Depletion and Amortization(DDA) was $65.9 Mil.
Selling, General & Admin. Expense(SGA) was $78.9 Mil.
Total Current Liabilities was $59.1 Mil.
Long-Term Debt was $293.3 Mil.



1. DSRI = Days Sales in Receivables Index

Measured as the ratio of days’ sales in receivables in year t to year t-1.

A large increase in DSR could be indicative of revenue inflation.

DSRI=(Receivables_t / Revenue_t) / (Receivables_t-1 / Revenue_t-1)
=(52.211 / 433.961) / (56.265 / 371.748)
=0.12031265 / 0.15135253
=0.7949

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.

GMI=GrossMargin_t-1 / GrossMargin_t
=(GrossProfit_t-1 / Revenue_t-1) / (GrossProfit_t / Revenue_t)
=(198.583 / 371.748) / (206.989 / 433.961)
=0.53418714 / 0.47697604
=1.1199

3. AQI = Asset Quality Index

AQI is the ratio of asset quality in year t to year t-1.

Asset quality is measured as the ratio of non-current assets other than plant, property and equipment to total assets.

AQI=(1 - (CurrentAssets_t + PPE_t) / TotalAssets_t) / (1 - (CurrentAssets_t-1 + PPE_t-1) / TotalAssets_t-1)
=(1 - (270.932 + 15.44) / 1083.86) / (1 - (320.34 + 10.189) / 1126.966)
=0.73578506 / 0.70670899
=1.0411

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.

SGI=Sales_t / Sales_t-1
=Revenue_t / Revenue_t-1
=433.961 / 371.748
=1.1674

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))
=(65.884 / (65.884 + 10.189)) / (42.247 / (42.247 + 15.44))
=0.86606286 / 0.73234871
=1.1826

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)
=(102.987 / 433.961) / (78.863 / 371.748)
=0.23731856 / 0.21214102
=1.1187

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)
=((295.721 + 53.845) / 1083.86) / ((293.284 + 59.064) / 1126.966)
=0.32251951 / 0.31265185
=1.0316

8. TATA = Total Accruals to Total Assets

Total accruals calculated as the change in working capital accounts other than cash less depreciation.

TATA=(IncomefromContinuingOperations_t - CashFlowsfromOperations_t) / TotalAssets_t
=(NetIncome_t - NonOperatingIncome_t - CashFlowsfromOperations_t) / TotalAssets_t
=(-34.133 - -9.975 - 79.756) / 1083.86
=-0.0959

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 -2.90 suggests that the company will not be a manipulator.


Related Terms

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


Historical Data

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

Bankrate Inc Annual Data

Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15Dec16
DSRI 1.00470.67860.75321.90150.73680.80821.810.65721.10240.795
GMI 0.94131.20821.06540.92430.92741.64810.76621.07420.91251.1225
AQI 1.26772.18211.11981.02471.03560.99250.8710.82681.14241.0411
SGI 1.20021.74550.7881.67781.9231.07490.64981.18821.05661.1672
DEPI 0.9710.76880.89941.02771.02440.99091.00160.92161.04481.1826
SGAI 0.91170.8081.35160.65081.23950.38981.37731.27370.97321.1119
LVGI 1.33751.71555.58970.80180.59870.96131.38011.09550.9791.0316
TATA -0.0361-0.0851-0.1169-0.0468-0.0397-0.037-0.0738-0.0297-0.0882-0.1051
M-score -2.49-2.15-4.93-1.17-2.02-2.31-2.76-2.88-2.72-2.94

Bankrate Inc Quarterly Data

Sep14Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16Dec16
DSRI 0.65721.08291.4971.1030.55870.46340.7949
GMI 1.07320.81750.60030.91251.01191.17421.1199
AQI 0.82681.06811.03961.14240.92871.00271.0411
SGI 1.18820.94040.75591.05591.23371.45961.1674
DEPI 0.92160.9821.00761.04480.95720.9471.1826
SGAI 1.33713.13426.63660.93350.79880.94691.1187
LVGI 1.09551.03681.02960.9791.05551.14781.0316
TATA -0.0132-0.0338-0.0511-0.0773-0.069-0.0998-0.0959
M-score -2.82-3.07-3.65-2.66-3.01-2.98-2.90
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