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GuruFocus has detected 2 Warning Signs with Travelzoo Inc $TZOO.
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Travelzoo Inc (NAS:TZOO)
Beneish M-Score
-2.75 (As of Today)

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.

Travelzoo Inc has a M-score of -2.75 suggests that the company is not a manipulator.

TZOO' s Beneish M-Score Range Over the Past 10 Years
Min: -3.61   Max: -1.37
Current: -2.75

-3.61
-1.37

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.


Definition

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 * 0.9691+0.528 * 0.9758+0.404 * 1.0304+0.892 * 0.9071+0.115 * 0.8953
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.001+4.679 * -0.0356-0.327 * 0.9315
=-2.75

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

This Year (Dec16) TTM:Last Year (Dec15) TTM:
Accounts Receivable was $14.4 Mil.
Revenue was 29.262 + 30.44 + 34.046 + 34.804 = $128.6 Mil.
Gross Profit was 25.931 + 27.079 + 30.434 + 30.795 = $114.2 Mil.
Total Current Assets was $44.5 Mil.
Total Assets was $53.5 Mil.
Property, Plant and Equipment(Net PPE) was $6.2 Mil.
Depreciation, Depletion and Amortization(DDA) was $2.5 Mil.
Selling, General & Admin. Expense(SGA) was $93.7 Mil.
Total Current Liabilities was $29.8 Mil.
Long-Term Debt was $0.0 Mil.
Net Income was 0.943 + 1.619 + 2.02 + 2.049 = $6.6 Mil.
Non Operating Income was -0.48 + 0.251 + -0.091 + 0.133 = $-0.2 Mil.
Cash Flow from Operations was 6.806 + -1.989 + 2.491 + 1.414 = $8.7 Mil.
Accounts Receivable was $16.4 Mil.
Revenue was 32.051 + 33.728 + 36.792 + 39.145 = $141.7 Mil.
Gross Profit was 27.723 + 28.986 + 31.584 + 34.599 = $122.9 Mil.
Total Current Assets was $57.1 Mil.
Total Assets was $68.6 Mil.
Property, Plant and Equipment(Net PPE) was $7.9 Mil.
Depreciation, Depletion and Amortization(DDA) was $2.8 Mil.
Selling, General & Admin. Expense(SGA) was $103.2 Mil.
Total Current Liabilities was $41.0 Mil.
Long-Term Debt was $0.0 Mil.



1. DSRI = Days Sales in Receivables Index

Measured as the ratio of days’ sales in receivables in year t to year t-1.

A large increase in DSR could be indicative of revenue inflation.

DSRI=(Receivables_t / Revenue_t) / (Receivables_t-1 / Revenue_t-1)
=(14.415 / 128.552) / (16.398 / 141.716)
=0.11213361 / 0.11571029
=0.9691

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.

GMI=GrossMargin_t-1 / GrossMargin_t
=(GrossProfit_t-1 / Revenue_t-1) / (GrossProfit_t / Revenue_t)
=(122.892 / 141.716) / (114.239 / 128.552)
=0.86717096 / 0.88865984
=0.9758

3. AQI = Asset Quality Index

AQI is the ratio of asset quality in year t to year t-1.

Asset quality is measured as the ratio of non-current assets other than plant, property and equipment to total assets.

AQI=(1 - (CurrentAssets_t + PPE_t) / TotalAssets_t) / (1 - (CurrentAssets_t-1 + PPE_t-1) / TotalAssets_t-1)
=(1 - (44.466 + 6.158) / 53.53) / (1 - (57.061 + 7.905) / 68.579)
=0.05428732 / 0.05268377
=1.0304

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.

SGI=Sales_t / Sales_t-1
=Revenue_t / Revenue_t-1
=128.552 / 141.716
=0.9071

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))
=(2.788 / (2.788 + 7.905)) / (2.53 / (2.53 + 6.158))
=0.26073132 / 0.29120626
=0.8953

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)
=(93.726 / 128.552) / (103.218 / 141.716)
=0.72909017 / 0.72834401
=1.001

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 + 29.823) / 53.53) / ((0 + 41.015) / 68.579)
=0.55712684 / 0.59806938
=0.9315

8. TATA = Total Accruals to Total Assets

Total accruals calculated as the change in working capital accounts other than cash less depreciation.

TATA=(IncomefromContinuingOperations_t - CashFlowsfromOperations_t) / TotalAssets_t
=(NetIncome_t - NonOperatingIncome_t - CashFlowsfromOperations_t) / TotalAssets_t
=(6.631 - -0.187 - 8.722) / 53.53
=-0.0356

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 -2.75 suggests that the company will not be a manipulator.


Related Terms

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


Historical Data

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

Travelzoo Inc Annual Data

Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15Dec16
DSRI 1.20751.11630.85110.98180.76321.00230.90931.28371.09970.9691
GMI 1.0121.00891.02631.00471.02771.01631.00461.01921.00890.9758
AQI 2.71033.07341.75681.23650.98921.02080.60171.07451.10741.0304
SGI 1.1351.02421.16281.20021.31531.01911.12880.89810.92480.9071
DEPI 1.82571.69250.42710.79720.94731.17081.34741.14960.91740.8953
SGAI 1.27811.12370.99270.91560.92731.0490.99561.04260.9921.001
LVGI 1.71291.30130.74581.05381.62340.99681.37710.75171.29440.9315
TATA -0.0258-0.03640.003-0.1602-0.1801-0.1891-0.19620.1560.1154-0.0356
M-score -1.78-1.72-2.12-3.00-3.45-3.32-3.61-1.45-1.97-2.75

Travelzoo Inc Quarterly Data

Sep14Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16Dec16
DSRI 1.02371.33211.19661.17831.28781.05981.16361.15231.02660.9691
GMI 1.01621.02031.01261.01621.01411.00791.0090.99190.98150.9758
AQI 1.4661.07450.73950.71840.97911.10741.48351.12020.81321.0304
SGI 1.03470.86550.86940.89240.88180.95960.93690.91870.91240.9071
DEPI 1.27441.14960.88070.8670.91040.91741.00831.05231.00320.8953
SGAI 0.95171.07131.08311.08661.06590.96540.95190.95480.96641.001
LVGI 0.73670.75170.71790.81481.41.29441.40351.53490.88060.9315
TATA 0.2060.17060.14510.06730.16080.11540.1380.11090.0208-0.0356
M-score -1.14-1.37-1.77-2.17-1.72-1.97-1.66-2.01-2.48-2.75
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