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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 -1.52. The lowest was -3.59. 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 * 1.1633||+||0.528 * 1.0184||+||0.404 * 1.0241||+||0.892 * 0.8979||+||0.115 * 1.1136|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0578||+||4.679 * 0.1638||-||0.327 * 0.6527|
|This Year (Dec14) TTM:||Last Year (Dec13) TTM:|
|Accounts Receivable was $14.6 Mil.|
Revenue was 31.498 + 33.5 + 36.883 + 40.195 = $142.1 Mil.
Gross Profit was 27.218 + 29.025 + 32.509 + 35.418 = $124.2 Mil.
Total Current Assets was $77.4 Mil.
Total Assets was $90.5 Mil.
Property, Plant and Equipment(Net PPE) was $9.0 Mil.
Depreciation, Depletion and Amortization(DDA) was $2.8 Mil.
Selling, General & Admin. Expense(SGA) was $110.7 Mil.
Total Current Liabilities was $36.3 Mil.
Long-Term Debt was $0.0 Mil.
Net Income was 1.255 + 2.536 + 7.924 + 4.638 = $16.4 Mil.
Non Operating Income was -0.187 + 0.01 + 0.056 + 0.122 = $0.0 Mil.
Cash Flow from Operations was -0.168 + 0.476 + -0.529 + 1.751 = $1.5 Mil.
|Accounts Receivable was $14.0 Mil.
Revenue was 37.475 + 37.256 + 41.327 + 42.177 = $158.2 Mil.
Gross Profit was 32.806 + 32.934 + 36.902 + 38.192 = $140.8 Mil.
Total Current Assets was $101.5 Mil.
Total Assets was $114.8 Mil.
Property, Plant and Equipment(Net PPE) was $8.2 Mil.
Depreciation, Depletion and Amortization(DDA) was $3.0 Mil.
Selling, General & Admin. Expense(SGA) was $116.6 Mil.
Total Current Liabilities was $70.6 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)|
|=||(14.608 / 142.076)||/||(13.986 / 158.235)|
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)|
|=||(29.025 / 158.235)||/||(27.218 / 142.076)|
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 - (77.363 + 9.022) / 90.488)||/||(1 - (101.474 + 8.245) / 114.802)|
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))|
|=||(2.98 / (2.98 + 8.245))||/||(2.824 / (2.824 + 9.022))|
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)|
|=||(110.703 / 142.076)||/||(116.555 / 158.235)|
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 + 36.302) / 90.488)||/||((0 + 70.562) / 114.802)|
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|
|=||(16.353 - 0.001||-||1.53)||/||90.488|
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 -1.52 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