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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 * 1.1871||+||0.528 * 1.0095||+||0.404 * 1.4835||+||0.892 * 0.9183||+||0.115 * 1.0083|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9764||+||4.679 * 0.1419||-||0.327 * 1.4035|
|This Year (Mar16) TTM:||Last Year (Mar15) TTM:|
|Accounts Receivable was $17.4 Mil.|
Revenue was 34.804 + 32.051 + 33.728 + 34.064 = $134.6 Mil.
Gross Profit was 30.795 + 27.723 + 28.986 + 29.159 = $116.7 Mil.
Total Current Assets was $51.1 Mil.
Total Assets was $62.1 Mil.
Property, Plant and Equipment(Net PPE) was $7.4 Mil.
Depreciation, Depletion and Amortization(DDA) was $2.6 Mil.
Selling, General & Admin. Expense(SGA) was $100.0 Mil.
Total Current Liabilities was $34.2 Mil.
Long-Term Debt was $0.0 Mil.
Net Income was 2.049 + 0.435 + 8.857 + 1.326 = $12.7 Mil.
Non Operating Income was 0.133 + -0.376 + -0.202 + 0.021 = $-0.4 Mil.
Cash Flow from Operations was 1.414 + 3.117 + -1.723 + 1.472 = $4.3 Mil.
|Accounts Receivable was $16.0 Mil.
Revenue was 39.145 + 34.291 + 36.307 + 36.883 = $146.6 Mil.
Gross Profit was 34.599 + 29.651 + 31.494 + 32.509 = $128.3 Mil.
Total Current Assets was $77.4 Mil.
Total Assets was $89.6 Mil.
Property, Plant and Equipment(Net PPE) was $8.7 Mil.
Depreciation, Depletion and Amortization(DDA) was $3.1 Mil.
Selling, General & Admin. Expense(SGA) was $111.5 Mil.
Total Current Liabilities was $35.2 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)|
|=||(17.414 / 134.647)||/||(15.974 / 146.626)|
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)|
|=||(128.253 / 146.626)||/||(116.663 / 134.647)|
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 - (51.133 + 7.374) / 62.073)||/||(1 - (77.444 + 8.693) / 89.607)|
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))|
|=||(3.108 / (3.108 + 8.693))||/||(2.607 / (2.607 + 7.374))|
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)|
|=||(99.998 / 134.647)||/||(111.525 / 146.626)|
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 + 34.225) / 62.073)||/||((0 + 35.203) / 89.607)|
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|
|=||(12.667 - -0.424||-||4.28)||/||62.073|
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 -1.64 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