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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 -2.05.
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 * 1.1016||+||0.528 * 1.0088||+||0.404 * 1.1074||+||0.892 * 0.9232||+||0.115 * 0.9174|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.008||+||4.679 * 0.1309||-||0.327 * 1.2944|
|This Year (Dec15) TTM:||Last Year (Dec14) TTM:|
|Accounts Receivable was $16.4 Mil.|
Revenue was 32.051 + 33.728 + 34.064 + 36.492 = $136.3 Mil.
Gross Profit was 27.723 + 28.986 + 29.159 + 32.258 = $118.1 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 $103.7 Mil.
Total Current Liabilities was $41.0 Mil.
Long-Term Debt was $0.0 Mil.
Net Income was 0.435 + 8.857 + 1.326 + 1.909 = $12.5 Mil.
Non Operating Income was -0.376 + -0.202 + 0.021 + -0.087 = $-0.6 Mil.
Cash Flow from Operations was 3.117 + -1.723 + 0.372 + 2.426 = $4.2 Mil.
|Accounts Receivable was $16.1 Mil.
Revenue was 34.291 + 36.307 + 36.883 + 40.195 = $147.7 Mil.
Gross Profit was 29.651 + 31.494 + 32.509 + 35.418 = $129.1 Mil.
Total Current Assets was $79.4 Mil.
Total Assets was $93.3 Mil.
Property, Plant and Equipment(Net PPE) was $9.5 Mil.
Depreciation, Depletion and Amortization(DDA) was $3.0 Mil.
Selling, General & Admin. Expense(SGA) was $111.4 Mil.
Total Current Liabilities was $43.1 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)|
|=||(16.398 / 136.335)||/||(16.124 / 147.676)|
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)|
|=||(28.986 / 147.676)||/||(27.723 / 136.335)|
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 - (57.061 + 7.905) / 68.579)||/||(1 - (79.37 + 9.498) / 93.307)|
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))|
|=||(2.986 / (2.986 + 9.498))||/||(2.788 / (2.788 + 7.905))|
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)|
|=||(103.682 / 136.335)||/||(111.418 / 147.676)|
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 + 41.015) / 68.579)||/||((0 + 43.111) / 93.307)|
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|
|=||(12.527 - -0.644||-||4.192)||/||68.579|
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 -1.90 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