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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.
TripAdvisor Inc has a M-score of -2.37 suggests that the company is not a manipulator.
During the past 6 years, the highest Beneish M-Score of TripAdvisor Inc was -2.48. The lowest was -2.53. And the median was -2.51.
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 TripAdvisor 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 * 1.2471||+||0.528 * 1.007||+||0.404 * 1.0092||+||0.892 * 1.2987||+||0.115 * 1.3191|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.1301||+||4.679 * -0.0949||-||0.327 * 0.8974|
|This Year (Sep14) TTM:||Last Year (Sep13) TTM:|
|Accounts Receivable was $180 Mil.|
Revenue was 354 + 323 + 281 + 212.661 = $1,171 Mil.
Gross Profit was 343 + 314 + 273 + 209.947 = $1,140 Mil.
Total Current Assets was $792 Mil.
Total Assets was $1,956 Mil.
Property, Plant and Equipment(Net PPE) was $161 Mil.
Depreciation, Depletion and Amortization(DDA) was $54 Mil.
Selling, General & Admin. Expense(SGA) was $616 Mil.
Total Current Liabilities was $417 Mil.
Long-Term Debt was $270 Mil.
Net Income was 54 + 68 + 68 + 20.443 = $210 Mil.
Non Operating Income was 0 + 0 + 0 + -1.536 = $-2 Mil.
Cash Flow from Operations was 59 + 158 + 109 + 71.523 = $398 Mil.
|Accounts Receivable was $111 Mil.
Revenue was 255 + 247 + 230 + 169.393 = $901 Mil.
Gross Profit was 249 + 243 + 226 + 165.855 = $884 Mil.
Total Current Assets was $648 Mil.
Total Assets was $1,448 Mil.
Property, Plant and Equipment(Net PPE) was $65 Mil.
Depreciation, Depletion and Amortization(DDA) was $32 Mil.
Selling, General & Admin. Expense(SGA) was $420 Mil.
Total Current Liabilities was $257 Mil.
Long-Term Debt was $310 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)|
|=||(180 / 1170.661)||/||(111.138 / 901.393)|
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)|
|=||(314 / 901.393)||/||(343 / 1170.661)|
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 - (792 + 161) / 1956)||/||(1 - (647.752 + 64.551) / 1448.153)|
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))|
|=||(32.134 / (32.134 + 64.551))||/||(54.226 / (54.226 + 161))|
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)|
|=||(616.474 / 1170.661)||/||(420.039 / 901.393)|
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)|
|=||((270 + 417) / 1956)||/||((310 + 256.811) / 1448.153)|
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|
|=||(210.443 - -1.536||-||397.523)||/||1956|
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.
TripAdvisor Inc has a M-score of -2.37 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
TripAdvisor Inc Annual Data
TripAdvisor Inc Quarterly Data