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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 2.12. The lowest was -4.49. And the median was -2.35.
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 * 0.6482||+||0.528 * 0.9391||+||0.404 * 0.9287||+||0.892 * 1.0635||+||0.115 * 0.9572|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9033||+||4.679 * -0.0641||-||0.327 * 1.0555|
|This Year (Mar16) TTM:||Last Year (Mar15) TTM:|
|Accounts Receivable was $55.0 Mil.|
Revenue was 93.278 + -44.632 + 140.76 + 132.865 = $322.3 Mil.
Gross Profit was 46.073 + 11.743 + 66.017 + 58.194 = $182.0 Mil.
Total Current Assets was $285.4 Mil.
Total Assets was $1,083.3 Mil.
Property, Plant and Equipment(Net PPE) was $10.7 Mil.
Depreciation, Depletion and Amortization(DDA) was $59.7 Mil.
Selling, General & Admin. Expense(SGA) was $79.0 Mil.
Total Current Liabilities was $41.2 Mil.
Long-Term Debt was $293.9 Mil.
Net Income was 0.283 + 4.772 + -23.391 + 0.32 = $-18.0 Mil.
Non Operating Income was -9.71 + 0 + 0 + -12.834 = $-22.5 Mil.
Cash Flow from Operations was 6.885 + 24.579 + 22.661 + 19.788 = $73.9 Mil.
|Accounts Receivable was $79.8 Mil.
Revenue was 89.01 + -57.988 + 141.65 + 130.367 = $303.0 Mil.
Gross Profit was 47.7 + 4.732 + 56.122 + 52.193 = $160.7 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 $60.9 Mil.
Selling, General & Admin. Expense(SGA) was $82.3 Mil.
Total Current Liabilities was $71.6 Mil.
Long-Term Debt was $297.7 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)|
|=||(55.013 / 322.271)||/||(79.807 / 303.039)|
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)|
|=||(160.747 / 303.039)||/||(182.027 / 322.271)|
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 - (285.388 + 10.742) / 1083.279)||/||(1 - (260.039 + 14.176) / 1260.479)|
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))|
|=||(60.931 / (60.931 + 14.176))||/||(59.713 / (59.713 + 10.742))|
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)|
|=||(79.021 / 322.271)||/||(82.264 / 303.039)|
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)|
|=||((293.881 + 41.187) / 1083.279)||/||((297.748 + 71.646) / 1260.479)|
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|
|=||(-18.016 - -22.544||-||73.913)||/||1083.279|
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 -3.11 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