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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 Travelzoo Inc was 1.65. The lowest was -4.25. And the median was -2.11.
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 Travelzoo 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 * 1.1523||+||0.528 * 0.9919||+||0.404 * 1.1202||+||0.892 * 0.9187||+||0.115 * 1.0523|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9548||+||4.679 * 0.1109||-||0.327 * 1.5349|
* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.
|This Year (Jun16) TTM:||Last Year (Jun15) TTM:|
|Accounts Receivable was $18.4 Mil.|
Revenue was 34.046 + 34.804 + 32.051 + 33.728 = $134.6 Mil.
Gross Profit was 30.434 + 30.795 + 27.723 + 28.986 = $117.9 Mil.
Total Current Assets was $50.2 Mil.
Total Assets was $60.2 Mil.
Property, Plant and Equipment(Net PPE) was $7.2 Mil.
Depreciation, Depletion and Amortization(DDA) was $2.5 Mil.
Selling, General & Admin. Expense(SGA) was $98.0 Mil.
Total Current Liabilities was $34.5 Mil.
Long-Term Debt was $0.0 Mil.
Net Income was 2.02 + 2.049 + 0.435 + 8.857 = $13.4 Mil.
Non Operating Income was -0.091 + 0.133 + -0.376 + -0.202 = $-0.5 Mil.
Cash Flow from Operations was 2.491 + 1.414 + 3.117 + 0.207 = $7.2 Mil.
|Accounts Receivable was $17.4 Mil.
Revenue was 36.792 + 39.145 + 34.291 + 36.307 = $146.5 Mil.
Gross Profit was 31.584 + 34.599 + 29.651 + 31.494 = $127.3 Mil.
Total Current Assets was $78.9 Mil.
Total Assets was $91.0 Mil.
Property, Plant and Equipment(Net PPE) was $8.4 Mil.
Depreciation, Depletion and Amortization(DDA) was $3.2 Mil.
Selling, General & Admin. Expense(SGA) was $111.7 Mil.
Total Current Liabilities was $34.0 Mil.
Long-Term Debt was $0.0 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)|
|=||(18.4 / 134.629)||/||(17.38 / 146.535)|
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)|
|=||(127.328 / 146.535)||/||(117.938 / 134.629)|
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 - (50.238 + 7.228) / 60.153)||/||(1 - (78.944 + 8.413) / 90.985)|
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))|
|=||(3.154 / (3.154 + 8.413))||/||(2.528 / (2.528 + 7.228))|
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)|
|=||(97.981 / 134.629)||/||(111.7 / 146.535)|
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)|
|=||((0 + 34.504) / 60.153)||/||((0 + 34.001) / 90.985)|
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|
|=||(13.361 - -0.536||-||7.229)||/||60.153|
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.
Travelzoo Inc has a M-score of -2.01 signals that the company is likely to 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
Travelzoo Inc Annual Data
Travelzoo Inc Quarterly Data