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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 -1.37. The lowest was -3.61. 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 * 1.0266||+||0.528 * 0.9815||+||0.404 * 0.8132||+||0.892 * 0.9124||+||0.115 * 1.0032|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9664||+||4.679 * 0.0208||-||0.327 * 0.8806|
* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.
|This Year (Sep16) TTM:||Last Year (Sep15) TTM:|
|Accounts Receivable was $16.7 Mil.|
Revenue was 30.44 + 34.046 + 34.804 + 32.051 = $131.3 Mil.
Gross Profit was 27.079 + 30.434 + 30.795 + 27.723 = $116.0 Mil.
Total Current Assets was $47.2 Mil.
Total Assets was $56.5 Mil.
Property, Plant and Equipment(Net PPE) was $6.7 Mil.
Depreciation, Depletion and Amortization(DDA) was $2.4 Mil.
Selling, General & Admin. Expense(SGA) was $95.3 Mil.
Total Current Liabilities was $29.8 Mil.
Long-Term Debt was $0.0 Mil.
Net Income was 1.619 + 2.02 + 2.049 + 0.435 = $6.1 Mil.
Non Operating Income was 0.251 + -0.091 + 0.133 + -0.376 = $-0.1 Mil.
Cash Flow from Operations was -1.989 + 2.491 + 1.414 + 3.117 = $5.0 Mil.
|Accounts Receivable was $17.8 Mil.
Revenue was 33.728 + 36.792 + 39.145 + 34.291 = $144.0 Mil.
Gross Profit was 28.986 + 31.584 + 34.599 + 29.651 = $124.8 Mil.
Total Current Assets was $58.7 Mil.
Total Assets was $71.0 Mil.
Property, Plant and Equipment(Net PPE) was $8.4 Mil.
Depreciation, Depletion and Amortization(DDA) was $3.1 Mil.
Selling, General & Admin. Expense(SGA) was $108.1 Mil.
Total Current Liabilities was $36.8 Mil.
Long-Term Debt was $5.7 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)|
|=||(16.692 / 131.341)||/||(17.822 / 143.956)|
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)|
|=||(124.82 / 143.956)||/||(116.031 / 131.341)|
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 - (47.205 + 6.73) / 56.46)||/||(1 - (58.707 + 8.361) / 70.971)|
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))|
|=||(3.052 / (3.052 + 8.361))||/||(2.446 / (2.446 + 6.73))|
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)|
|=||(95.329 / 131.341)||/||(108.119 / 143.956)|
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 + 29.75) / 56.46)||/||((5.658 + 36.81) / 70.971)|
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|
|=||(6.123 - -0.083||-||5.033)||/||56.46|
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 -2.48 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
Travelzoo Inc Annual Data
Travelzoo Inc Quarterly Data